In a real estate transaction, the real estate agent’s commission is paid from the deposit held by the listing brokerage in accordance with the agreement of purchase and sale. Once the transaction has been completed, the seller’s solicitor will notify the listing brokerage that the transaction has been completed and the listing brokerage will proceed to deduct the total commission payable plus HST from the deposit held in their trust account with the balance paid back to the seller(s). If there is not enough money in their trust account to satisfy the commission, the listing brokerage will send a commission statement to the seller’s lawyer requesting that adequate funds be paid to them from the closing proceeds so that they are able to pay the agents their commission. Failure by the seller’s lawyer to revert adequate funds to the listing brokerage may result in personal liability to the seller’s lawyer for the shortfall. It is the listing brokerage that then reverts enough funds to the co-op brokerage to cover the commission for the buyer’s agent.

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Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please  contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.