Public articles

Payment of rent: the first payment and terms of payment

Concerning the payment of rent, section 1904 of the Civil Code of Quebec provides that:

“The lessor may not exact any instalment in excess of one month's rent; he may not exact payment of rent in advance for more than the first payment period or, if that period exceeds one month, payment of more than one month's rent.

Nor may he exact any amount of money other than the rent, in the form of a deposit or otherwise, or demand that payment be made by postdated cheque or any other postdated instrument.”

The Inspection Department also verifies the operating accounts of agencies and brokers acting on their own account

Although it is stated in the regulations and in the invitation letter, some agency executive officers and some brokers acting on their own account are sometimes reluctant to allow an inspector to verify their bank accounts (statements, cheques and deposit book) other than their trust account.

Can a promise to purchase be withdrawn?

The promise to purchase signed by the buyer shall be binding on him until the expiry of the acceptance period indicated in clause 14.1. The broker must always inform the buyer that his promise to purchase binds him to the seller as soon as it is signed.

Clause 10.5 of the promise to purchase, to ward off unpleasant surprises

Should the buyer or the seller be notified, following the fulfilment of conditions, but before the signing of the deed of sale, of any defect or irregularity whatsoever affecting the titles of the immovable or the declarations and obligations of the seller, the buyer has a recourse provided under clause 10.5 of the Promise to purchase form (for the Promise to purchase – Divided co-ownership (PPD) form, it’s under clause 10.7). If the buyer learns that the immovable has a defect or irregularity (e.g. an inground pool encroaching on a Hydro-Québec servitude), he is not bound to purchase the immovable with this irregularity.

Heavy fines for carrying out the activity of an agency and broker illegally

Carrying out the activity of a real estate or mortgage agency or broker illegally is a violation of the Real Estate Brokerage Act.

The client’s right of withdrawal in the brokerage contract: A choice to be respected

Section 28 of the Real Estate Brokerage Act provides that the client may terminate the contract at the client’s discretion within three days after receiving a duplicate of the contract signed by both parties. The contract is terminated by operation of law as of the sending or delivery of a written notice to the licence holder. 

Aging oil tanks - How to lessen the difficulties they can cause

Insuring an immovable with an oil tank that is aging⁽¹⁾ or has been improperly or inadequately maintained can prove difficult. This in turn could jeopardize a transaction. When selling such an immovable, real estate brokers must be mindful of their duty to inform and advise, which will help reduce the problems that the presence of such a tank can cause.

Trust account: refund of sums received as deposits or earnest money

In the context of a real estate transaction, it frequently happens that a buyer makes a deposit on the sale price. The sum received from the buyer must remain in the trust account until it is required by the notary for signing of the deed of sale.

Property Transfer Duties

As indicated in section 2.1 of the Act respecting Duties on Transfers of Immovables, the tax brackets are increased each year according to the Consumer Price Index for Quebec.

Understanding first refusal clause R2.2 of the mandatory form Annex R - Immovable

Clause R2.2 of the mandatory form Annex R – Immovable, the so-called “first refusal", generates a lot of questions from brokers and consumers. In fact, the OACIQ Info Center receives many calls to this effect. Followings are a few clarifications to help understand how it works.

The seller remains free to refuse a Promise to purchase even if it meets all the conditions in the brokerage contract

Note: This judgement was rendered under the old Real Estate Brokerage Act (R.S.Q. c. C-73.1) and regulations applicable at that time of which the enforcement was entrusted to the ACAIQ (now known as the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)). Therefore, the following text refers to the vocabulary applicable at that time. However, the following analysis remains relevant under the Real Estate Brokerage Act (R.S.Q. C-73.2) that came into force on May 1, 2010 and amended in June 2018.

Notice to the Land Register in case of land contamination

The Environment Quality Act (''the Act'') establishes rules regarding land protection and rehabilitation in case of contamination. It is supplemented by the Land Protection and Rehabilitation Regulation, whose purpose includes setting out the types of industrial or commercial activities that require a particular treatment and establishing contamination limit values beyond which rehabilitation measures must be undertaken.

The confidentiality of promises to purchase

Nicole went ahead as usual. As soon as she knew that two buyers wanted to submit promises to purchase, she notified her selling client and agreed with him on a meeting with the two other brokers. They wanted to present their respective clients' promises to purchase themselves, as was their right. Nicole was very pleased. After a few weeks of depressing calm, these two promises to purchase, "two" more promises, were just what she needed. And what's more, one of them was submitted by her office colleague and great friend, Françoise.

Share purchase for exclusive use of a dwelling

There is a method of acquiring real estate that all real estate brokers must acquaint themselves with. It is a process, sometimes called ''securitization'', by which a buyer acquires, on the one hand, a number of shares in a corporation (formerly called company) whose main asset is an immovable and, on the other hand, under a leasing agreement inseparable from the share acquisition agreement, the exclusive use of a given apartment in the immovable. The buyer then holds all rights of use to this apartment and may, in principle, occupy it or lease it. In this type of transaction, the acquisition of shares is therefore indivisible from the right to occupy an apartment specifically tied to the shares acquired.

The sale of shares: Do you have the right?

Licence holders are sometimes called upon to act as intermediaries for the sale or purchase of an enterprise. In this type of transaction, various scenarios are taken into account, including the sale of assets or the sale of shares, to determine which path is the most advantageous both for the seller and the buyer. The option chosen can also have important repercussions on the real estate broker's or agency’s right to receive compensation. The court cases commented upon below are a good illustration. That is why licence holders must remain vigilant, because some transactions could fall under the jurisdiction of the Securities Act.

The statement of registration: sometimes a condition for issuing a licence

Filing a statement of registration can sometimes be one of the conditions for issuance of a licence. The OACIQ must also comply with the Act respecting the legal publicity of enterprises, which is why it requires a copy of this statement to issue a licence.

Notaries and lawyers must act “in the course of their practice”... or be OACIQ licence holders

Note: This article refers to a judgement rendered between 2004 and 2012, at the time when the old Real Estate Brokerage Act (R.S.Q. c. C-73.1) and its regulations were in force. Therefore, the following text refers to the vocabulary applicable at that time. However, the following analysis remains relevant under the Real Estate Brokerage Act (R.S.Q. C-73.2) that came into force on May 1, 2010 and updated on July 13, 2018 after the adoption of Bill 141.

Abiding by the Act respecting Tourist Accommodation Establishments

In the course of their activities, some licence holders act as intermediaries for the short-term rental of cottages, houses or apartments. Considering their duty to verify, inform and advise, these brokers would be well-advised to know the ins and outs of the Act respecting Tourist Accommodation Establishments.

Cancellation of a previously accepted promise to purchase

Clause R2.3 of Annex R - Residential immovable allows the seller to accept a new promise to purchase conditional upon the cancellation of a previously accepted promise to purchase.

The importance of confirming the cancellation of a promise to purchase

Several clauses appearing particularly on the forms Promise to purchase, Annex F and Annex R state that the Promise to purchase shall become null and void if one of the parties fails to comply with the deadline indicated therein. Clause 6.3 of the Promise to purchase is an excellent example of this situation.