How to Cancel a Contract With a Real Estate Agent in Ontario

Every once in a while, a client signs an agreement with a real estate agent and then wants to cancel shortly thereafter. Sometimes, it’s simply a matter of cold feet. Other times, a client has a valid reason to void a contract. It can happen in residential as well as the commercial market. Can you fire a real estate agent? It will depend on the situation and the terms and clauses you have negotiated.

The challenge is that real estate agreements are considered legal and binding, and getting out of them isn’t always simple. In this post, we’ll answer your questions about if and how to get out of a contract with a Realtor® as a buyer or seller. (Disclaimer: This post is for informational purposes only and is not intended to solicit individuals currently under contract with another brokerage.)

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Residential Versus Commercial Real Estate Agreements

To start, let’s review the types of contracts you may be asked to sign. Though the Ontario Real Estate Association (OREA) has different forms for commercial and residential contracts, both sectors share many similarities. Under the Trust in Real Estate Services Act, all real estate agents must represent their client’s best interests. This applies equally whether selling or buying a residential or commercial property.

Listing Agreement, Ontario

When selling a property, a signed listing agreement allows a real estate agent to represent you. The document details a description of the property, the list price, a commencement and expiry date, the commission, and whether there is a holdover period.

Buyer Representation Agreement, Ontario

This document outlines the nature of the representation, describes the property, acknowledges receipt of the RECO Information Guide, and outlines the buyer’s responsibilities. Like the listing agreement, it will also have a commencement and an expiry date.

Agreement of Purchase and Sale

This is essentially an offer to purchase a home or commercial property. Commercial agreements can be far more complex, but both contain a property description, an agreed-upon price, the deposit amount, any inclusions or exclusions, a closing and possession date, and an expiry date when the offer becomes null and void.

With very few exceptions, you cannot back out of a signed Agreement of Purchase and Sale without consequences, so be sure to review the document carefully with your real estate agent before you proceed.

Looking for more resources to buy a commercial or residential property? The posts below might have the information you need:

If I Sign a Contract With a Realtor®, Can I Get Out of It?

That’s a commonly asked question. After both parties sign an agreement, the contract can only be broken under a set of pre-defined circumstances or when it passes the expiry and holdover periods.

You are not obligated to buy or sell a property. However, if you do so during the stated timeframe, your real estate agent is likely entitled to compensation. RECO guidelines state that clients can request cancellation of either a Listing Agreement or Buyer Representation Agreement, but it’s at the brokerage’s discretion whether or not to honour it.

All real estate contracts come with an expiry date, so there’s always the option of simply waiting it out. Once the expiry date passes and any holdover period is over, you can start over with a clean slate with a new agent or brokerage.

What Is a Mutual Release in Real Estate?

A mutual release is a written agreement where all parties agree to void the contract. When both you and your real estate agent are on the same page, getting out of the arrangement can be that simple.

If you are facing extenuating circumstances, your first step should be to communicate with your real estate agent to talk about your options. A mutual release won’t always be on the table, but remember that most agents are professionals who likely want to remain on positive terms.

Perhaps something has come up and you need to put your buying or selling plans on hold. Your real estate agent will still want your business at a later time. At the very least, they want to maintain the relationship and potentially gain referrals.

Can I Fire My Real Estate Agent?

How to fire a real estate agent isn’t really the question since they’re not a direct employee. If you have a valid reason or have negotiated a cancellation clause, you could potentially get out of a contract.

Once again, every situation is different. It’s important to consider every possible scenario before putting anything in writing. A court may side with you if you can clearly demonstrate that a real estate agent did not hold up their end of the agreement. Barring that, you’ll likely need to pursue a mutual release or wait until the contract expires.

The best way to avoid the need to cancel a real estate contract is to find an agent you can trust for life. Learn more in Why Everyone Needs a Real Estate Agent For Life.

Can I Change My Realtor® After Signing a Contract?

In this case, you still need the services of a real estate agent, maybe just not the one you’re contracted to work with. Again, it depends on the situation.

Representation is typically with the brokerage rather than the individual, so switching agents within the same organization is quite likely possible.

When switching brokerages, cancellation of a Listing Agreement or Buyer Representation Agreement is less simple. Without a valid clause, you could potentially be liable for breach of contract. If you have time to wait, it might be better to let the agreement expire before agreeing to work with a new real estate agent.

Are you planning to sell a home or business? The posts below can help you plan:

Do You Have to Pay a Realtor® If You Decide Not To Sell?

Real estate commissions are generally contingent upon the successful close of the sale. In most cases, you do not have to pay if your house or business does not sell. However, like always, it’s important that you read the terms of your agreement carefully. There are some circumstances in which you might have to compensate your agent even when no transaction takes place.

Examples could include clauses to reasonably protect the agent’s efforts, like if they bring a buyer who is ready and able to buy – but you refuse them. There may also be terms where you agree to compensate for any marketing expenses if you change your mind about selling.

You can avoid a lot of stress and uncertainty in real estate through careful planning and research. By waiting until you are sure you want to move forward with a transaction and asking relevant questions, you can be confident you have partnered with a capable and dedicated expert.

Do you have questions about Toronto residential or commercial real estate? Connect with me at OMarjanovic@kw.com or call 647.620.2882 and I am happy to help.

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