Commercial real estate brokerage: when a broker leaves an agency

Sometimes a broker changes agency, decides to act on his own account or retire.

The rules set out in the Regulation respecting brokerage requirements, professional conduct of brokers and advertising regarding agency change notices, including sections 24 and 26, also apply in the commercial field.

When a broker leaves an agency

When a broker leaves an agency, the client must be informed in writing that he can:

• continue doing business with the broker at his new business place;
• continue doing business with the agency; or
• terminate the brokerage contract.

Since the brokerage contract is concluded with the agency, it’s the latter that should notify the seller in writing. Otherwise, the notice should be given by the broker. In this notice, the client is invited to indicate his choice no later than the day of the agency change.

The consequences of the client’s failure to reply to the notice are not always the same.

When the OACIQ Exclusive brokerage contract - Sale of an immovable form is used (e.g.: BCG or BCS), clause 10.3 of the form provides that failure to receive a reply from the client no later than the day the broker stops acting on behalf of the agency, the contract shall be deemed to be terminated on that date.

If this clause is not used, or if the clause set out in the brokerage contract does not provide for an automatic termination of the contract, and should the client fail to reply on the day the broker stops acting for the agency, the brokerage contract will then remain in force and the executive officer will have to assign another broker to replace the one who left the agency. The executive officer will have to indicate to the client the name of the replacing broker in the brokerage contract, while specifying that in the absence of a notice to the contrary from him, his contract with the agency remains valid.

When a broker acting for the agency retires, passes away, suspends or revokes his commercial real estate licence

When a broker acting for the agency retires, passes away, suspends or revokes his commercial real estate licence, the client must be notified in writing by the agency with which he is bound by a brokerage contract that he may:

• continue doing business with the agency;
• terminate the brokerage contract.

Failure to receive a reply from the client, there is no automatic termination of the contract in this case. Except in the case of a termination notice from the client, the contract will continue with the agency. The latter must then provide the client with the name of the replacing broker.

For more information in this regard, feel free to contact Info OACIQ.