Humber/Ontario Real Estate Course 4 Exam Practice

If there's no signed buyer representation agreement but a sale is negotiated, should remuneration be paid?

1. Yes, as long as the property was shown to the buyer.

2. Yes, provided the buyer acted on the broker's advice.

3. No, because the agreement wasn't signed.

4. No, unless the sale happens within the broker's holdover period.

The correct answer is: No, because the agreement wasn't signed.

In real estate transactions, a signed buyer representation agreement is essential for establishing the formal relationship between the buyer and the broker and for outlining the terms of compensation. When no such agreement exists, there is no formal commitment from the buyer to work exclusively with the broker, which essentially means the broker does not have a legal claim to remuneration for the sale, regardless of any negotiations or showings that took place. This is because, without a signed agreement, the broker has not secured an expectation of payment from the buyer. Even if the property was shown to the buyer or negotiations occurred, these factors alone do not establish a right to remuneration without the formal agreement in place. The absence of a signed agreement leaves the broker in a position where they cannot enforce payment for the services rendered, as there was no mutual understanding of compensation terms agreed upon at the outset. In the context of real estate laws and practices, the requirement of a signed agreement is a standard procedure that protects both the buyer and the broker, ensuring that both parties are clear on their rights and obligations, including any compensation owed to the broker.