What happens if I sell privately while under contract?
What happens if I sell privately while under contract? The blunt truth Milton sellers need to hear.
Why this matters in Milton, ON
You live in Milton. You have a listing agreement with an agent. You found a buyer through a friend, social media, or a sign on the lawn. You want to skip the agent fee and sell privately. That sounds smart on paper. In practice it can cost you time, money, and legal exposure. This post explains exactly what happens when you try to sell privately while under contract in Milton, Ontario — the legal, financial, and practical consequences — and the smart ways to handle it.
Who this is for
- Homeowners in Milton, Ontario (Milton, ON) thinking about a private sale (FSBO)
- Sellers already under an exclusive listing agreement who found a buyer
- Anyone working with agents and worried about commission disputes
Quick bottom line
If you sell privately while under an active listing contract, your agent will likely be entitled to commission unless the agreement says otherwise or you negotiate a release. In Ontario, listing agreements are enforceable contracts. Agents can sue for commission, and disputes often end up in court or mediation. Don’t gamble; get legal advice and call your agent first.
Local facts that change the outcome
- Most Milton listings use standard Ontario listing agreements (OREA forms). They give the agent the right to a commission for sales during the term and sometimes for a holdover/protection period.
- Milton is in Halton Region. Real estate closings in Ontario require a lawyer or licensed paralegal to register the transfer. A private sale still needs proper legal paperwork.
- The Real Estate Council of Ontario (RECO) oversees agent conduct. That doesn’t cancel a contract. It means agents must act ethically and disclose conflicts.
Legal implications in Milton, Ontario
1) The listing agreement is a contract
A signed listing agreement creates binding obligations. If it’s an “exclusive right to sell” agreement — the most common — the agent is entitled to commission even if you find the buyer. The contract’s wording matters. Look for: term dates, commission rate, and any holdover/protection clause.
2) Holdover or protection periods
Many Ontario listings include a protection clause that extends commission rights beyond the listing expiry for buyers introduced during the listing. Common protection windows range from 30 to 180 days. The exact period depends on your contract. If your private buyer was introduced while the listing was active, the agent may still claim commission after the listing expires.
3) Procuring cause and disputed commissions
If the agreement isn’t clear, disputes revolve around procuring cause — who brought the buyer to the transaction and whose efforts led to the sale. In Ontario, procuring cause is debated in court. Agents often win if they can show they brought the buyer or substantially advanced the sale.
4) Remedies and enforcement
If an agent believes they’re owed commission they can:
- Sue you for breach of contract in Ontario civil courts
- Seek mediation or arbitration if the contract requires it
- File a complaint with RECO about unprofessional conduct (this won’t cancel the contract or remove commission rights)
Financial implications for Milton sellers
- Commission owed: If the agent wins, you pay the agreed commission. That could be 2.5%–5% or a flat fee, depending on your contract.
- Legal fees: Defending a commission lawsuit or negotiating a release costs money. In Milton, expect lawyer fees for advice and potentially court costs.
- Delayed closing: Disputes can delay registration and transfer at your lawyer’s office. That costs time and stress.
- Reduced sale proceeds: After commission and legal fees, your net proceeds drop. Think short-term savings vs long-term cost.
Practical risks and operational steps
- Paperwork still needed: Even private sales in Milton need a lawyer or paralegal to handle the closing and HST/adjustments. The absence of an agent doesn’t remove legal obligations.
- Buyer confidence: Buyers expect clear title, disclosures, and professional handling. A private sale without proper documents can scare buyers off or trigger future legal problems.
- MLS exposure: Selling privately cuts your market reach. In Milton’s competitive market, less exposure can mean a lower price or longer time to close.
How to handle this — smart, practical options
1) Read your listing agreement now
Stop guessing. Open the contract. Look for: exclusive right to sell, commission rate, term dates, holdover/protection clause, and dispute resolution method.
2) Talk to the agent first
Call the agent. Offer to negotiate. Agents often prefer a quick compromise rather than a lawsuit. Options include:
- Buyout: pay a portion of the commission as a release
- Reduced-fee arrangement: split the fee or pay a flat admin fee
- Written release: get the agent to sign a release for no fee if they agree
3) Get legal advice in Milton
Contact a real estate lawyer in Milton or Halton Region. Tell them the facts. Ask about likely outcomes and cost estimates. Your lawyer will review the contract, draft a release, or defend you if necessary.
4) Consider the agent’s exposure and incentives
If the agent did minimal work, they may accept a lower payout. If the agent actively marketed and showed the home, they’ll likely insist on full commission.
5) If you already closed privately
If you completed a sale while under contract, don’t ignore a commission claim. Get a lawyer. You may owe the agent commission regardless of the sale’s completion.
Scenarios and real Milton examples
Scenario A — You signed an exclusive right to sell and sold privately to a friend during the term.
Result: Agent likely owed full commission. Best move: negotiate a buyout or pay commission and avoid litigation.
Scenario B — Your listing expired, but you sold to a buyer who saw the house while it was listed.
Result: Protection clause likely triggers. Agent may claim commission. Discuss a settlement.
Scenario C — You signed an exclusive agency listing (rare) and sold privately.
Result: You may owe nothing. But read the contract. Agency type matters.
Avoiding problems before you list
- Choose the right listing: If you plan to try a private sale, discuss an open listing or exclusive agency with your agent.
- Get the holdover window minimized: Negotiate a short holdover period or no protection clause if possible.
- Put any private buyer deals in writing and disclose prior showings/contact with buyer.
Local resources in Milton
- Real estate lawyers in Milton and Halton Region — required for closing in Ontario
- RECO (Real Estate Council of Ontario) — agent rules and complaints
- MLS/Realtor.ca exposure options — weigh exposure vs private sale risk
Why work with a Milton agent instead of risking FSBO
- Market knowledge: Agents know Milton neighbourhood demand, pricing, and comparable properties.
- Negotiation: Agents get better net prices more often than FSBO sellers.
- Legal safety: Agents manage paperwork, conditions, and closing logistics so you avoid costly mistakes.
Call to action
If you’re in Milton and facing this exact situation, stop guessing. Talk to a local expert. Email Tony Sousa at tony@sousasells.ca or call 416-477-2620. Get an honest review of your listing agreement and clear options to protect your proceeds.
FAQ — Selling privately while under contract in Milton, Ontario
Q: Can an agent in Milton stop me from selling privately?
A: An agent cannot physically stop a sale. But a signed listing agreement is a contract that gives the agent legal rights to commission. If you sell privately while the contract is active or within the protection period, the agent can sue for commission. That legal claim can force a settlement or judgment against you.
Q: What if the buyer was never shown by the agent?
A: If the buyer never had contact with the agent and you can prove you found the buyer independently after listing expiry, you may avoid commission. If the buyer saw the property or had contact during the listing, the agent can claim procuring cause.
Q: Is there a standard holdover period in Milton listings?
A: No single standard. Many Ontario forms include a protection clause; typical windows are 30–180 days. Always check your specific contract.
Q: Do I need a lawyer to complete a private sale in Milton?
A: Yes. Ontario requires a lawyer or licensed paralegal to register the transfer of title. You still need professional help for closing, HST considerations, and adjustments.
Q: What if my listing was “exclusive agency”?
A: Exclusive agency agreements sometimes allow the owner to sell privately without paying commission, but many homeowners sign exclusive right to sell agreements instead. Read the contract.
Q: Can I settle with the agent for less than full commission?
A: Often yes. Agents may accept a negotiated buyout to avoid litigation. The outcome depends on how much work they invested and their willingness to compromise.
Q: Will RECO help me cancel a contract?
A: RECO enforces standards of practice. They don’t automatically cancel valid contracts. RECO can discipline agents for misconduct but won’t resolve commission disputes—that’s a civil matter.
Q: What are practical steps if I already closed privately?
A: 1) Get a lawyer. 2) Review the listing agreement. 3) Respond to any commission claim with legal counsel. Ignoring a claim risks judgement and higher costs.
Final word — act like a businessperson
This is simple math and risk management. Contracts matter. Milton’s market moves fast. A private sale might save commission in rare, clean cases. More often it creates legal fights and costs that wipe out savings. Read your contract. Talk to the agent. Call a Milton real estate lawyer. If you want a straightforward review, contact Tony Sousa at tony@sousasells.ca or 416-477-2620. You’ll get direct advice, local expertise, and an action plan to protect your bottom line.
