‘Bulletproof’ contract wins broker court case

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Brokers will chalk this one up as a win for the industry against flighty mortgage shoppers.

Over a year ago, a client contacted Graeme Moss, a broker with Verico Fair Mortgage Solutions to arrange a second mortgage.

“I knew he had gotten a quote from another broker. He said mine was a lot better but [that he] needed it done quickly; we got him the commitment, we got the full sign-back, so the lawyer had gone through a lot of work, and the lender went through quite a bit of work,” Moss told MortgageBrokerNews.ca. “From start to finish we aimed for a week to close a quarter of a million dollar second mortgage. On the Friday, he emailed asking me to call him.”

And that’s when things went south.

“He said the first mortgage that was cancelled came through. It was miraculously rejuvenated. The broker fee [for my deal] was $2,911 for a 250,000 second, which is very cheap,” Moss said. “He said to me, thanks for all the hard work, we’re going with the other guy.”

Moss explained to the client that, due to the work put in by himself, the lawyer, the lender, and all parties involved, the broker fee still needed to be paid.

The client refused and the matter was taken to small claims court in late June.

 “The judge basically said to him, you’re going to lose. This guy is thinking I’m wrong, he’s innocent. The court case was June 21,” Moss said. “It went from 10-5:30. I testified for at least two hours. He self-represented and he got eviscerated by the judge.”

Moss won the case and was awarded the original broker fee as well as legal fees. He credits the contract put together by his legal team with helping him enforce the fee.

“Contracts, if done correctly, are enforceable,” Moss said. “The judge said the wording was bulletproof.”

According to Moss, the ordeal is indicative of the lack of respect many people have for brokers and the time they put into each deal.

“I felt very, very used and we did a lot of work,” Moss said. “I don’t think the industry has the respect it deserves; a good broker is a quasi-lawyer, trustee and I don’t think it’s … valued that much. I thought there is no way this guy is going to get away with that.”

Moss shared the “bulletproof” wording of the contract, which can be seen below.

  • Marina on 2016-07-04 9:17:36 AM

    Well done Moss!!! It is very important clients understand that we work hard to put those deals together and should not be neglected this way. Unfortunately, it became a normal practice for public to shop around and make 2 or 3 brokers work on same deal against one another. Hopefully this case will go public and make clients appreciate us and our time more!!! Thank you Moss, proud of you!!!

  • Omer Quenneville on 2016-07-04 9:40:05 AM

    Correct me if I am wrong but part of the problem is no standardization. We should have be moving in the same direction with some of our policies and standards. No reason why we can't have a standard agreement for all clients to sign regardless of company. Then it will be up to service to separate us from one another and the banks and I think we can do a much better job than the banks any day.

  • Dave on 2016-07-04 9:40:33 AM

    Great story, congrats to Moss! Many clients have pulled these moves on brokers over the years after they've done all the work. They think we're just here to waste our time and that we're just gonna say "ok" when they call to say they dont need the loan anymore.

  • Julie Stamp on 2016-07-04 9:43:17 AM

    This has been an ongoing theme in this line of work, it is one of the few service based jobs that is not protected when doing the work for the client. Most people appreciate that work was done on their behalf, sometimes hours and hours of it, however there are always those few that act in the apparent cavalier manner that this client did, that our time/effort and work do not have value, when the exact opposite is true. This should be an industry standard that is put forward to FISCO by our industry representative associations, there are many cries for tougher regulations on the broker industry and now with changes in other Provinces regarding disclosure of our earnings mandated, that's fine, but it should hold both ways and this legal paragraph should be instituted into the existing Disclosure document to protect all agents and Brokers. Mr. Moss should not have had to take the steps to go to court to earn his commission, this is long overdue in our industry as a standard. A commitment was obtained, the client signed the commitment, this is no less a legal obligation or document than a Realtor's contract. Once a lender commitment is signed the client is agreeing to the terms and conditions of that commitment and the obligations involved therein. It is a lack of respect for our industry, however it's a lack that we allow, due to I believe not having a singular representative for the Broker channel, FISCO is mostly concerned with policing the Broker channel to ensure compliance, which is a good thing, however we lack a comprehensive unified voice for making positive changes for the Broker channel. We need to demand the protection that is readily provided to other similar industries. I am satisfied that Mr. Moss won his case, although I do not believe that would be in doubt with a judge, it is unfortunate that he had to go to those lengths as a singular Agent/Broker he is in the right however as it is not an industry standard it could negatively impact his business. Thank you for sharing your Acceptance contract and hopefully more agents will incorporate this into their document procedures.

  • Hasan Merchant on 2016-07-04 9:48:49 AM

    I am really happy that Moss stood by his service commitment and had the due justice done.

    Somebody had to 'bell the cat'... Let the general public know that, though they may do shopping around but once the broker/agent starts working on their case, they are committed and should pay for the services....

  • Andy on 2016-07-04 10:01:31 AM

    I agree with Omer. Our industry should adopt forms similar to Real Estate Professionals (e.g. Buyer Agency). We need better representation from our associations.

  • Tomas on 2016-07-04 10:02:35 AM

    Moss only got a judgement in his favour. A judgement is not $$$. Has he collected?

  • Terry Lynch on 2016-07-04 10:04:14 AM

    Congrats Graham! Well done! This rings very true for me, having had 2 deals go south this year under identical circumstances, and with the clients' attitudes of 'so what?' I appreciate Graham's sharing of his acceptance clause, I feel it should be standard in all forms to prevent this kind of behaviour. This a total lack of respect for the work we put in to obtain a mortgage, and it is usually the 'difficult' ones that do this. Way to go Graham and thanks for sharing.

  • Lakshmi Lewis on 2016-07-04 11:07:24 AM

    Congratulations !!
    This deserves a happy ending!!

  • Ron Butler on 2016-07-04 11:32:46 AM

    Well done Graham and thanks for sharing the agreement. I want to point out that this is a case of providing a private mortgage which entails a mountain of work as well as involving a solicitor to prepare the mortgage document itself not simply to receive instructions. This type of works needs distinct protection for the broker and Graham's is an excellent example.

    I would hope that brokers who work in the prime lending space realize that this type of agreement will not work as perfectly for triple A mortgages. We need to be careful in our handling of Prime clients and not try to enforce agreements that don't stand up to normal market competition factors.

  • David O'Gorman on 2016-07-04 1:36:29 PM

    Love it!
    When the job is done properly, you should be paid.
    My fear is that some brokerage will have done a less than stellar job, changed terms & conditions & hen believe, because they have this clause, they are entitled to be paid.Not necessarily so.
    When you go court it's not what you did or didn't do, it's what you can prove you did or didn't do. Complete documentation, emails, notes about phone calls & conversations, full written disclosure, all put you in a better position when you get to court.
    Don't be intimidated by small claims court.The judge has usually read the pleadings & documentation before court.As in this case the judge told the client what the outcome was going to be, to try & convince the client to pay, before judgement is granted.

    As to associations standardizing forms, great idea, been around for awhile but know association has taken the lead. Standard association forms , written in simple language, make it easier to enforce in court. Something like a standard cobrokerage form would make it easier for broker-to-broker transactions.Acstandard brokerage-client contract to which schedules & amendments could be added
    would be a cleaner more consistent fashion of doing business.

  • Najeeb on 2016-07-04 2:53:42 PM

    Congrats Moss.

  • JustMyOpinion on 2016-07-05 7:14:41 AM

    First I want to be clear that I agree that a client needs to pay for work that was done.

    Here is my problem. Do we have to write an article for the public to read that a broker took a client to court for 7.5 hours? How does this help our industry? Do you not think that a bank mobile specialist will use an article like this for ammunition?

  • Dave on 2016-07-05 9:33:29 AM

    @Tomas , good question, did he collect?

    The problem with judgments is they could just sit there for a while and broker gets paid in 10 years

  • IMHO on 2016-07-11 7:42:31 AM

    While I am happy the broker was paid for his work, does this not contravene the Broker Act which says no "upfront" fees may be charged unless the mortgage is over $400k. As this mortgage never funded with Graeme, is it not considered an upfront fee? Did the judge overrule what the law in Ontario says about charging fees?

  • Nino G on 2016-07-11 10:11:15 AM

    Nice to hear....The two comments that said it was only a judgement and did they collect are sadly missing the point...


  • Paul Mangion on 2016-07-11 1:03:49 PM

    Well done. I have used contracts for many years and fortunately only had to use the contracts a couple of times. We will also use it for triple a lending as I find they are the worst offenders. The branches are so willing to tell there customers to go get something in writing so I can ask for a rate exception. A good broker offers incredible value and deserves to be paid. I mentor our agents to be very clear that we expect to be paid if we get them what they want. I explain this to borrowers in a way they can understand. "How would you like it if your boss decided to not pay you for a week because you spent too much time with a customer perfectly willing to waist your time?". I think we all know the answer to that question.

  • Paul Mangion on 2016-07-11 1:06:14 PM

    Hey Dave. You have all the rights to collect and since they are a homeowner it won't be a problem. You have to make an effort and if it is not collectible (ie. no job and renters) then why would you bother to go to court?

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