Under what circumstances can remuneration be shared or gifts be offered in residential and commercial brokerage?

RESIDENTIAL REAL ESTATE

A broker may share his remuneration with the following:

Another licence holder from Québec, another province or another jurisdiction. The www.arello.com website can be used to identify the organizations responsible for overseeing real estate brokerage in various jurisdictions, and obtain their contact information in order to verify if a person is licensed in that jurisdiction. This site is also a gateway to various official agencies and to North American and international monitoring and regulatory organizations.

If there are no real estate regulatory agencies or licensing requirements in a jurisdiction, then there is  no  illegal  practice  there,  and therefore  a  broker or agency from Québec may share  their  remuneration with a  person from that jurisdiction.

Firms, independent representatives or partnerships licensed by the Autorité des marchés financiers (the Autorité’s register is updated and available to the public). Examples: financial planner, personal or general insurance representative, stock broker. Exceptions : Non-licence holders who are granted an exception to the Real Estate Brokerage Act to engage in a brokerage transaction. These persons may, instead of carrying out the transaction themselves, direct the client to a broker and receive compensation from this broker. However, the broker is not obligated to share his remuneration with these persons. The following are the most common of these exceptions:

Lawyers and notaries, when done in the course of their functions. Examples of cases where the broker could share his remuneration with a lawyer acting in the course of his functions:

• As part of his mandate concerning a divorce, a lawyer refers his client to the broker to enter into a Brokerage contract – Sale. The broker may share his remuneration with this lawyer.
• A lawyer is mandated by a financial institution to undertake legal proceedings to repossess an immovable. As part of his mandate, the lawyer directs the institution to a real estate broker for the sale of the immovable. The broker may share his remuneration with this lawyer.
• A notary recommends a broker for the sale of an immovable as part of an estate settlement, thus in the course of his functions.

In a residential transaction, abroker may not share his remuneration with:

• a real estate developer who refers him a buying client to sell his/her existing home;
• a debt consolidation company;
• an unlicensed intermediary who is a party to a real estate brokerage contract for the lease of a residential immovable.

The restrictions on remuneration sharing help:

• fight against the illegal practice of real estate brokerage;
• avoid the involvement of multiple non-qualified players in a transaction;
• brokers to retain exclusivity over their field of practice;
• protect the public.

COMMERCIAL BROKERAGE

In commercial and mortgage brokerage, the agency may share remuneration with any person or company, as long as it does not engage in illegal brokerage. Therefore it could share with a lessee moving into the leased premises, but not with an association of merchants who refer the lessee to the broker.

Therefore, contrary to the rules governing remuneration sharing for residential transactions, which are more restrictive, the broker may share his remuneration with an unlicensed intermediary who is a party to a real estate brokerage contract for the lease of an immovable that is not part of the residential practice area.

GIFTS

The offer of gifts to a person with whom a broker cannot share his remuneration is possible, but this must not:

• be tantamount to illegal sharing of remuneration (To prevent a gift from being perceived by the Act and its regulations as an unauthorized remuneration sharing, it’s preferable for the gift not to be in the form of money);
• be conditional upon the completion of a transaction (such as a sale).

The value of the gift is also considered when determining if it is a promotion or a case of illegal sharing.

It should be noted that a broker cannot promote the giveaway of gifts to people who refer clients to him.

Can the holder of a licence restricted to residential real estate share remuneration if he directs a client to a full-service broker or a broker restricted to commercial brokerage?

Yes, a broker whose licence is restricted to a field of activity that is different from that of the broker (or agency) to whom the client is directed may be remunerated for the referral.

Procedure to verify if remuneration may be shared

With another real estate broker in Québec: Check the Register of licence holders under the Check a broker's record tab on the OACIQ website home page.

With a firm, an independent representative or partnership (authorized by AMF): The verification can be made on the www.lautorite.qc.ca website as follows: click the Register icon and then once you are on the Register of firms and individuals authorized to practise page, fill in the appropriate fields.

With a broker practising outside Québec and reporting to another jurisdiction Visit www.arello.com access “Regulatory Agencies”: select the appropriate province, state or country. You can also contact these agencies or organizations via their contact information on their respective websites.