It was signed months, maybe even years ago, and the agent was already partially paid. Those funds are long gone, having been used to run their business and their life. Now, the developer is demanding those funds back in full.

It’s a reality more Realtors face in a market experiencing an uptick in failed new construction deals. 

The numbers are dismal: Urban Nation reports 10 projects were cancelled in 2025’s third quarter alone, bringing the year-to-date cancelled total to 18 projects and 4,040 units.  

“Prior to 2022, it was rare to see a deal fall through,” said David Ionico, partner at McHugh Whitmore law firm in Stoney Creek, Ont. “In recent years, it is unfortunately a common occurrence, and I refer failed deals to litigation on what seems like a weekly basis.”

Ionico said that reasons for failed deals vary, but most recently, they have been due to purchaser financing issues.

“Lenders seem to have gotten stricter with their requirements and are more cautious to lend,” Ionico said. “Additionally, appraisals are coming in much lower than expected at the time of purchase, resulting in purchasers not being able to obtain enough funds to close.”

Implications for agents 

Unlike the average confirmation of co-operation form for the sale of existing homes, new developers typically have Realtors sign a document called an “Agreement to Co-operate.”

It’s a schedule outlining conditions for staggered commission payouts. For example, the first commission payment of one per cent is sent upon successful completion of the building’s roof. The second payout of one per cent is sent once the developer receives a mortgage commitment, and so forth. The condition criteria and commission percentages vary from developer to developer.

There is an important clause within this agreement that has become increasingly common: the repayment clause. 

Also called a “clawback clause,” this condition allows developers to rescind commissions previously paid to Realtors should buyers be unable to close. 

A poor understanding of terms may be hurting agents

Sam Hassaan, broker of record at Royal LePage Real Estate Services in Oakville, Ont., agrees that these clauses have become the “industry standard for most major developers.” 

He said agents typically do not raise concerns about the clause – perhaps because they don’t fully comprehend them.

“A significant number of agents do sign these agreements without fully understanding the ramifications and financial risks when the deal does not close,” said Hassaan.

While Realtors may get the short end of the proverbial stick with clawback clauses, developers include this clause for a reason.

“Put simply, a lot of deals aren’t closing and, as with other types of real estate transactions, the expectation is that the non-defaulting party won’t pay any commissions if the deal doesn’t close through no fault of their own,” said Ionico. “These clauses also incentivize co-operating agents to bring purchasers that are likely to close.”

‘Read before you sign’

Hassaan notes that repayment clause enforcement has become prominent in the current market, particularly in areas with high volumes of new development such as the Greater Toronto Area. While Hassaan advises Realtors to try and negotiate this clawback clause, Ionico states negotiating this clause would be dependent on the developer.

“I’m not sure my builder clients would negotiate this, given the higher risk of deals falling through these days,” said Ionico.

And while Ionico has seen agents try to contest repayment clauses, it usually doesn’t go far.

“I’ve seen agents dispute clawback clauses but never with a legal justification to do so. Assuming the clause is properly drafted, its enforceability is undisputable.”

Knowledge is the best defense for Realtors who want to delve into the world of new development sales. While Ontario’s Real Estate Salesperson Program includes sessions on new constructions, some brokerages also offer pre-con training.

As an extra precaution, Royal LePage Real Estate Services also implemented a brokerage policy for pre-construction deals. If multiple commission installments are woven into a deal, their policy is to hold the funds until the deal’s final closing. While this could mean a significant delay in commission payout, it protects the Realtor and brokerage from being unable to pay back the developer if the deal fails to close.

Realtors can take similar measures to protect their finances should their brokerages not have such policies in place. This could be as simple as setting aside your first or second installment in a separate account for safekeeping until the final payout is complete and the deal successfully closed.

For Ionico, the best advice he gives is simple: “Read before you sign,” he said. “If anything is unclear, it’s best to have a lawyer look at it.”

Diana Faria

Having stepped into the world of real estate as a receptionist over a decade ago, Diana worked in the industry at different capacities and climbed the ladder since. She has supported Realtors as a front desk assistant, organized incoming paperwork as a deals admin, and processed closings as a head-office accountant. Working at several brokerages gave her insight into their inner workings, from recruiting, social media marketing, commission payouts, and everything in between.

The face of real estate is often portrayed as a confident Realtor, but the hardworking cogs within the real estate machine — office admins, assistants, receptionists, and clerks — are often forgotten. Using her real estate and journalism experience, Diana sheds light on everything going on behind the scenes, while keeping the machine humming along.

The post Clawback clauses hit hard as pre-con closings collapse appeared first on REM.

Your hardworking deals admins collect and amalgamate all transaction paperwork, typically using an online management system like Skyslope or Nexone. They are the main point of contact amid the flurry of follow-ups from clients, lawyers, and agents alike. Depending on the size of the brokerage, they can input, organize, correct, and follow up with dozens of transactions per day.

All of this is to say: deals admins are busy. Having worked behind the scenes at the branch level for over a decade, and even as a deals admin myself for a couple of those years, here are some tips to ensure you and your deals admin are in sync.

Don’t make us chase paperwork

Be aware of the documents and information you’ve already handed in, and more importantly, what’s still outstanding. Most, if not all successful Realtors—and their teams—are organized. It isn’t a coincidence, it’s by design. If you struggle to remember whether you handed in a receipt of funds or exchanged lawyer information with the cooperating Realtor, create a checklist. 

Deals admins deal with hundreds of agents and even more transactions. Ensuring you, as an independent contractor, are on top of your transactions is critical to ensuring the deal flows smoothly from signing to closing.

Phone call vs. email

It’s natural for agents to prefer picking up the phone rather than replying to an email from their deals admin. It’s faster, easier, and you don’t have to tell yourself, “I’ll get to it later,” only to forget about it. However, sending and receiving a reply via e-mail ensures there’s a traceable “paper trail,” which phone calls don’t have. This means a deal administrator can save your e-mailed reply and add it to their online file in case of a future audit.

For example, your trade sheet does not explicitly state to give 25 per cent of your commission to a coworker, but you mention it in a phone call. Should this deal be selected for an audit in the future, the auditor may question why the commission was split when it wasn’t mentioned on the trade sheet. Instead, either correct your trade sheet or hit reply.

Send everything in one email

Once a deal is accepted, you need to send paperwork to your deals admin promptly. This ensures it’s quickly reported on MLS and all key parties are notified of the sales, such as accounting to verify a direct deposit, lawyers to speed up the closing process, and so forth.

But deals admins get a lot of emails. Ensure you have as many documents as possible in as few emails as possible, so your deals admin doesn’t have to sift through too many to find what they need. There’s no reason why your purchase and sale agreement, representation documents, and FINTRAC forms should all be in separate emails.

Also, in case it wasn’t obvious: clearly identify your e-mail by putting the property address in the subject line. This makes searching for specific e-mail chains much less painful.

Pointing out errors: it’s not personal, it’s business

Part of the deal administrator’s job is to ensure the documents they receive are as accurate as possible. You’d be surprised at how many little things, like missing initials on a price change on an agreement of purchase and sale, or writing “not applicable” as a job description on an individual identification information record (IIIR, but let’s face it, we all still call it a CIR), are fineable offenses. Don’t take a request to correct your errors as a personal attack. Mistakes happen. Correct them and move on.

The same applies when a deals admin asks you to fix something that’s recently changed. For example, your brokerage may have updated its trade sheet since the last time you submitted one, and it no longer accepts the existing one. Remember, real estate is an ever-evolving industry with rules and regulations that change and improve often. It’s your job as a Realtor to stay up-to-date with documents and policies, including your brokerage’s in-house forms. Asking why things have changed is understandable, but directing your frustration at your deals admin—who doesn’t control these changes—isn’t.

They aren’t your personal assistants

Lastly, remember that your deals admin works for the brokerage. They aren’t hired to give you their undivided attention. Most are more than willing to answer questions or direct you to someone who will help. But if you find yourself leaning on your deals admin too often, it may be time to consider hiring an assistant.

On that same note, while real estate has a knack for never sleeping, most deals admins work office hours. This means whatever comes in after 5 p.m., even if you have a deal that needs reporting as soon as possible, will generally wait until the next morning. Keep this in mind when it’s 9:02 a.m. the next day and you’re about to call your deals admin.

So, there you have it. Don’t think of these as a list of commandments chiselled in stone, but rather a handbook on how to get onto your deals admin’s good side. You never know when you’ll need to call in a favour.

Diana Faria

Having stepped into the world of real estate as a receptionist over a decade ago, Diana worked in the industry at different capacities and climbed the ladder since. She has supported Realtors as a front desk assistant, organized incoming paperwork as a deals admin, and processed closings as a head-office accountant. Working at several brokerages gave her insight into their inner workings, from recruiting, social media marketing, commission payouts, and everything in between.

The face of real estate is often portrayed as a confident Realtor, but the hardworking cogs within the real estate machine — office admins, assistants, receptionists, and clerks — are often forgotten. Using her real estate and journalism experience, Diana sheds light on everything going on behind the scenes, while keeping the machine humming along.

The post Paperwork 101: What your deals admin wants you to know appeared first on REM.