Mechanisms in case of ceasing of activities by a broker acting on his or her own account or for an agency, and in case of ceasing of activities by an agency

(Updated in August 2012)

The regulations adopted under the new Real Estate Brokerage Act that has been in force since May 1, 2010 stipulate that when a broker:

• leaves an agency to join another agency or to work for his or her own account;
• ceases to work for his or her own account and joins an agency;

The client has the option to:

• continue dealing with the broker;
• continue dealing with the agency, if applicable; or
• terminate the brokerage contract.

To facilitate the implementation of these new rules, the OACIQ has prepared standard notices for agencies and brokers to send to their clients based on the various situations that can occur. 

Brokerage contracts signed since May 1, 2010: ceasing of activities by a broker acting on his own account or for an agency, and ceasing of activities by an agency

Since May 1, 2010, it was required to annex the Transitional Annex to any brokerage contract and this annex included, among other things, clauses relating to situations mentioned above. These clauses are now an integral part of the new mandatory forms in force since July 1, 2012. However, the Transitional Annex can still be used with the recommended forms (Brokerage contract – Lease, immovable and enterprise) until the OACIQ publishes the new versions.

How clauses work

These clauses are available under section 10 of the new brokerage contracts – sale and under section 9 of the new brokerage contract – purchase (hereinafter referred to as BCP). They will also be included in the recommended brokerage contract forms which will be published by the OACIQ”

The case where a broker or an agency completely ceases activities is provided in clauses 10.2 (CCA 9, 2) and 10.4 (CCA 9.4).

In cases where the client chooses to follow his broker to the agency for which the broker will subsequently act, clauses 10.1(CCA 9.1) and 10.3 (CCA9.3) include a mechanism to ensure service continuity for the client (e.g. the marketing of the client’s property).

Under the former Real Estate Brokerage Act, a real estate agent who left a broker for another broker and wanted to continue serving ''his'' client had to (with the consent of the broker he was leaving) complete an ''Amendments and Notice of fulfillment of Conditions'' form in which the expiration date of the brokerage contract was changed to the date at which the agent would change brokers. After starting with the new broker, the agent would have a new brokerage contract signed by all his clients, who then became bound to the broker for whom the agent was now working. If this was not done, the client remained bound to the initial broker and was assigned a new agent.

It remains possible to do an agency transfer as described above. However, under this Act, the client is always free to follow his broker or to terminate the brokerage contract, even if the contract is stipulated to be irrevocable (non-cancellable). In addition, the mechanism provided in the clauses of section 10 (BCP section 9) is designed to make it easier for the client to change agencies if he or she so wishes. Among other things, the clauses stipulate that if the client has not made a choice before the broker leaves an agency or ceases to work for his or her own account, the brokerage contract shall be cancelled.

Standard notices

To implement these clauses, a notice will therefore have to be sent notifying the client of the change in the broker’s situation and the options available to the client. Several notices have been developed to cover the various situations that may occur.  The standard notices include a form that the client must complete to indicate his or her choice and return to the agency or broker.

Notice sent after the broker has left an agency or ceased to work for his or her own account

In this situation:

1. The initial brokerage contract is cancelled (therefore it is not necessary to have an Amendments form completed to cancel the contract);

2. A notice must be sent to inform the client that:

• the initial brokerage contract has been cancelled;
• the broker has left the agency (or has ceased to work for his or her own account);

3. The seller remains free to deal with the agency or broker of his or her choice;

If a contract is entered into with the agency for which the broker subsequently acts or with the broker working for his or her own account, the client’s file will have to be recreated by this agency or broker. Upon request by the client, the agency to which the client was initially bound must give the client a complete copy of his or her file.

Notice sent before the broker leaves an agency or ceases to work for his or her own account

In this situation, a notice must be sent to the client indicating:

• that the broker will leave the agency or will cease to work for his or her own account on the date indicated in the notice;
• the options available to the client (continue dealing with the broker, continue dealing with the agency or terminate his brokerage contract);
• that the client must notify the agency or broker, as the case may be, in writing of his choice before the broker leaves the agency or ceases to work for his or her own account;
• that failure to send this notice will result in the contract being cancelled as of the date at which the broker leaves the agency or ceases to for work his or her own account.

If the client chooses to follow the broker:

• the initial brokerage contract will be cancelled (therefore it is not necessary to have an Amendments form completed to cancel the contract);
• the client will be bound to the agency for which the broker is now acting, or to the broker himself if he or she has chosen to work for his or her own account, under the same terms as provided in the initial brokerage contract, without the need for a new brokerage contract to be signed;
• the file will have to be recreated by the new agency or the broker acting for his or her own account. Upon request by the client, the agency to which the client was initially bound must give the client a complete copy of his or her file.

For any questions, feel free to the OACIQ Info Center by telephone at 450 462-9800 or 1 800 440-7170 or by email by clicking on the following link: http://www.oaciq.com/contact.