Realtors Lose Commissions, Buyers Gain Ground

😬 Clawback Clauses Are Hitting Realtors

Source: Real Estate Magazine

The 411: With pre-construction deals falling apart across Ontario, Realtors are getting caught in the financial fallout. Developers are using “clawback clauses” to demand refunds of commissions already paid, leaving many agents blindsided and out thousands of dollars.

• 18 condo projects (4,040 units) have been cancelled in 2025 so far, as financing and appraisal issues derail deals

• Standard 4% commission is usually split into 2–3 staged payments tied to milestones (e.g., roof completion, financing approval, registration)

• Many buyers can’t close because lenders are tightening requirements, and appraisals are coming in below purchase prices.

• Developers now enforce clawback clauses* repayment terms requiring Realtors to return commissions if deals fail to close.

• Developers argue the clauses are fair: no closing, no commission

Why This Matters: . With financing failures and construction delays rising, developers are protecting themselves at Realtors’ expense. Agents who once relied on staggered 4% payouts are now finding that even “paid” commissions aren’t safe until the keys are in the buyer’s hand.

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