This column presents situations that come from actual cases referred to Info OACIQ, as well as concrete examples of things one should and should not do.

Doing business with a developer

The real estate developer, Pour un beau condo, has recently built a condominium tower in downtown Boucherville. Since he did not manage to sell all the dwellings of the immovable, he called on Ms. Belletour, real estate broker, to sell the remaining units.

Ms. Belletour accepted to deal with the sale of these new condos. As required and as she wanted to proceed according to generally accepted practices for this kind of transaction, she spoke to her agency executive officer. The latter decided to contact Info OACIQ to validate the information he had to send to his broker.

Here is what came out of the three-way conference call held between Ms. Belletour, her agency executive officer and the information agent of Info OACIQ.

What type of contract to choose?

In this context, there are two possible ways to conclude the brokerage contract. Indeed, from the outset, it is necessary to consider which way will be the most appropriate between:

  • One brokerage contract per unit for sale

or

  • A single general brokerage contract in which various units will be identified and described

Regardless of the method chosen, you must ensure that your brokerage contract provides for the following minimum information1:

  • The names and contact information of the parties;
  • The object and duration of the contract;
  • if such is the case, the contract’s exclusivity;
  • if such is the case, the contract’s irrevocability;
  • The identification of the immovable and its full description;
  • The price and terms of sale;
  • The mode of remuneration and the conditions on which the remuneration may be claimed;
  • Any other right or obligation of the parties, for example the seller's right to sell by himself;
  • Listing dwellings on an information listing service, such as Centris; 
  • The declarations by the seller of the immovable;
  • The possibility for the parties of engaging in conciliation, mediation or arbitration of accounts in the event of a dispute, as provided for in section 34 of the Real Estate Brokerage Act (chapter C-73.2).

Furthermore, it is important to remember that pursuant to section 111 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising, A broker or an agency may make representations or engage in advertising or disseminate information concerning an immovable only with the express written authorization of the owner. In this context, it is important to clearly identify in the contract all the dwellings for which the mandate has been entrusted to you.

A contract per unit
This is the easiest method for follow-ups to be carried out during a mandate. Each of the dwellings marketed and their characteristics will be described in separate contracts. Although it is necessary to complete and have a brokerage contract signed for each unit for sale, file management will be made easier.

If you opt for this option, since you are dealing with a legal person, it’s the following form which could be used:

  • Exclusive brokerage contract – Sale – Immovable

A single general contract
This method involves signing a single general contract with the developer. The management resulting from this method must be diligently and comprehensively carried out.

The description sheet and the brokerage contract will then have to be modified each time a dwelling is sold to reflect reality and not mislead the public or another broker. When one or more changes are made to the brokerage contract, the Amendments form must be used to record them in the contract.

If this method is chosen, the Annex G – General describing in detail each unit sold shall be used as an annex to the Exclusive brokerage contract – Sale – Immovable form. The box provided for this purpose must be checked under clause 3.1 of the form and the number of Annex G – General should be specified. Special attention must be paid to ensure that important details are not omitted and the description is complete, (for example: dimensions, designation and area of the private portion, parking space(s), asking price, etc.

The importance of collaboration and the duty of representation

To promote the success of a transaction, the rules of collaboration and representation must be respected. Here are a few important reminders: 

  1. A collaborating broker must deal with the listing broker and not directly with the developer. 
  2. During visits, the buyer's broker must accompany his client or be represented by a colleague. If the buying client is not represented, the listing broker should be present during the visit, as he must protect the interests of the developer with whom he has a brokerage contract. He must provide fair treatment to the buyer. 
  3. Brokers must exercise their duty to inform and advise their clients when concluding the preliminary contract.

Promise to purchase or preliminary contract?

The information centre Info OACIQ confirmed to Ms. Belletour and her agency executive officer that in the case where the immovable is sold by a developer, the following form is irrelevant:

  • Promise to purchase – Divided co-ownership – Fraction of a chiefly residential immovable held in divided co-ownership

This information corresponds to the note at the very beginning of the promise to purchase mandatory forms for chiefly residential immovable. According to this note, this form:

“(…) does not constitute the preliminary contract required under articles 1785 2 and following of the Civil Code of Québec for the sale of an immovable by a builder or promoter. Where a preliminary contract is required, a specific form must be used.”

If you find yourself in this kind of situation, you may also check the article entitled: Preliminary contract, a must for homes sold by a builder or promoter, on synbad.com.

Other cases
In the same vein, the information centre Info OACIQ received a call from Mr. Des Immeubles, another broker approached by a real estate developer. Mr. Des Immeubles wanted to know what type of form he had to use in his particular case. However, the context was different: it’s about new condos located in a fully commercial building and of which the buyers, legal persons, had to install offices or businesses therein.

In this situation, the recommended form Exclusive brokerage contract – Sale – Immovable could also be used for the seller, and the recommended form Promise to purchase – Immovable for the prospective buyers.

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1 Information from sections 13 and 17 of the Regulation respecting contracts and forms. 

2 Article 1785 of the Civil Code of Québec:

“1785. The sale of an existing or planned residential immovable by the builder or a promoter to a natural person who acquires it to occupy it shall be preceded by a preliminary contract by which a person promises to buy the immovable, whether or not the sale includes the transfer to him of the seller’s rights over the land.

A stipulation that the promisor may withdraw his promise within 10 days after signing it shall be included in the preliminary contract.”

 

Last updated on: November 24, 2020
Numéro d'article: 123104