Prohibition of double representation

The real estate broker's primary duty is to promote and protect the interests of his clients and to act with loyalty toward them. He must not disclose his clients' confidential and strategic information. Also, every client has the right to benefit from the objective and independent advice of his real estate broker.

When the real estate broker has a brokerage contract with each of the two parties (buyer and seller, lessee and lessor), he is in an exceptional, unforeseen or unforeseeable situation of double representation. The real estate broker cannot fulfill his ethical obligations to promote and protect the interests of his two clients and to act with loyalty toward them because their interests are conflicting. For this reason, double representation is prohibited since June 10, 2022.

See more details in the Guideline – Conflicts of interest.

Only residential transactions are subject to the double representation ban, i.e. the purchase, sale, lease or exchange of a building described in section 23 of the Real Estate Brokerage Act: 

• Part or all of a chiefly residential building comprising less than five dwellings; or
• Fraction of a chiefly residential building held in divided or undivided co-ownership;
• Residential lot.

If the real estate broker is bound by a brokerage contract to sell and a brokerage contract to purchase in the same transaction, he is in a situation of double representation. However, double representation is prohibited since June 10, 2022.

The brokerage contract to purchase is then terminated and the real estate broker ceases to represent the buyer's interests.

• The real estate broker must notify his buying client of the termination of his brokerage contract to purchase with him. The brokerage contract to purchase shall be terminated by operation of law upon the broker sending (not receiving) or submitting a substantiated written notice to his client explaining the double representation prohibition rule.

• By terminating the brokerage contract to purchase, the broker must advise his buying client to conclude a new brokerage contract to purchase with another real estate broker to ensure that he is represented and his interests are defended. However, the buyer is not obliged to use the services of another licensee. In fact, the buyer may elect to enter into the transaction without being represented by another licensee.

• If the buyer chooses not to be represented, the real estate broker must inform the buyer that he cannot represent him, protect, promote  and defend his interests. He must inform the buyer that he can only treat him fairly. He must explain to him that his role now is to protect and promote the seller's interests only. Read this article for more details.

• Under the new section 29.1 of the REBA, a licensee may not claim compensation following the termination of a brokerage contract to purchase when he is in a situation of double representation.

Remember that only brokers who concluded brokerage contracts to purchase are mandated to protect and promote buyers' interests.

Also, when signing the brokerage contract to purchase, the broker must inform the buyer in writing that the contract could be terminated if he wanted to present a promise to purchase for an immovable for which he is also acting as the seller's broker, i.e. in the case of double representation. In this case, the broker must use this standard clause. He may insert it in section 10.1 ("Other declarations and conditions") of the form Exclusive brokerage contract – Purchase – Chiefly residential immovable containing less than five dwellings excluding co-ownership or insert it in the Annex G - General form, which must then be attached to the brokerage contract to purchase.

A new section (29.1) will be added to the REBA. It provides for the following: 

“29.1. Except in the cases prescribed in the Organization’s regulations, a licensee shall terminate a brokerage contract to purchase or lease a building when the licensee learns that the client covered by the contract intends to make a proposal to purchase, lease or exchange a building covered by another contract entered into by the licensee to sell, lease or exchange it.

A brokerage contract to purchase or lease an immovable shall be terminated by operation of law upon the licensee sending or submitting a substantiated written notice to the client, which shall notably indicate the immovable concerned. Furthermore, the licensee shall advise his client to sign a new brokerage contract to purchase or lease an immovable with another licensee.

The licensee shall not claim any compensation following the termination of the contract.”

Double representation is prohibited in order to ensure public protection, given that:

• The real estate broker has an obligation to avoid conflicts of interest: therefore he cannot simultaneously protect the divergent interests of a buyer to whom he is bound by a brokerage contract to purchase, and those of a seller to whom he is also bound by a brokerage contract to sell for the purpose of the same transaction.
• In concrete terms, it is impossible for a real estate broker to prioritize the interests of the seller, who wants to sell at the best possible conditions and the highest possible price, while at the same time protecting the interests of the buyer, who wants to pay the lowest possible price.

Here are the steps which the broker must take when entering into a brokerage contract to purchase:

1. At the time of signing a brokerage contract to purchase: the real estate broker must immediately inform the buyer that he may have to terminate the brokerage contract in the event that he finds himself in a double representation situation, and that the legislation allows for no exception. Standard clause 1.16 – Warning to the buyer – double representation is designed to help brokers manage this situation (to be inserted in 10.1 of the brokerage contract to purchase or in an Annex G).
   
   At the same time, the broker must make sure that the buying client clearly understands his obligations under the brokerage contract (for example, when visiting an open house by himself, the buyer must notify the seller’s broker upon arrival that he is already represented by another broker). This allows you to be more transparent with your client and avoid potential misunderstandings and confusion for members of the public.
    
2. During the term of the brokerage contract to purchase: the real estate broker named in the brokerage contract to purchase must inform the buyer, as soon as he learns that the latter plans to submit a promise to purchase, that the immovable concerned is covered by another brokerage contract entered into by the broker or his agency (situation of double representation).
    
   • In the case of the two exceptions mentioned in standard clause 1.16 (underserved region and brokerage contract signed with another broker from the agency on the same property): standard clause 1.15 – Notice regarding the exception applicable in a situation of double representation enables the broker to notify the buyer in a timely manner and to obtain the buyer’s consent to continue representing him.
      
   • In the case where no exception mentioned in standard clause 1.16 - Warning to the buyer – double representation applies or the buyer does not consent to having the broker continue to represent him: the broker must terminate the brokerage contract to purchase and continue to represent the seller only.
      
3. If the brokerage to contract is terminated: the real estate broker representing the seller must recommend that the buyer seek representation by another real estate broker by entering into a new brokerage contract to purchase.
   
   He must notify the buyer in writing. The brokerage contract to purchase is terminated by operation of law from the sending of this notice.
   
   Standard clause 1.14 - Notice of termination of the Exclusive brokerage contract – Purchase is designed to help the broker manage this situation. This standard clause must be integrated into the mandatory form Amendments (AM) and signed by the buyer.
   
   The termination of the brokerage contract should not come as a surprise to the buyer, as the broker will already have informed him of this possibility at the time of signing of the brokerage contract to purchase.
    
4. Following the termination of the brokerage contract to purchase: the broker cannot claim any remuneration from the buyer or from any other broker to whom he may have referred the buyer.
    
   • The buyer wishes to be represented by another real estate broker.
     
     The broker may refer the buyer to other brokers, but cannot limit the referral to a single name. The broker cannot receive remuneration for such a referral, as this would constitute a conflict of interest, given that he remains involved in the transaction as the seller’s broker. Moreover, section 29.1 of the REBA clearly stipulates that a licensee cannot claim remuneration following termination of the brokerage contract when he finds himself in a situation of double representation.
      
   • The buyer does not wish to be represented by another broker.
     
     The broker must inform the buyer that he represents the seller and has an obligation to protect and promote the interests of his client. The broker must tell the buyer that he will treat him fairly if he is not represented by another broker.

Check out this diagram (PDF) for a better understanding of the right thing to do when a buyer is interested in a property for which the broker also has a brokerage contract to sell (or a brokerage contract for residential lease).

The agency executive officer must ensure that the broker facing a double representation situation complies with the regulations in force, as indicated in question 3.

The agency must ensure that the broker acting on its behalf does not represent both the seller and the buyer in the same transaction.

The agency must ensure that the broker or the agency notifies the buyer that the brokerage contract to purchase with him is terminated by operation of law as of the sending or delivery of the notice of termination. 

The agency or the broker may not claim any compensation following the notice of termination.

The agency or the broker must advise the buyer, following the notice of termination, to enter into a new contract to purchase or lease the immovable with another real estate broker or agency to ensure that he is represented and his interests are defended.

It is strongly recommended that written confirmation of receipt of the notice of termination be obtained from the buyer to ensure that the buyer is aware that the broker is no longer representing him.

If the buyer chooses not to be represented (i.e., to not inter into another written brokerage contract to purchase with another licensee), the agency must ensure that the broker informs the buyer that he cannot pretend to represent, protect, promote  or defend his interests. He must inform him that he will only treat him fairly by providing him with objective information about all the facts relevant to the transaction and the rights and obligations of all parties to the transaction.

Should an AEO witness a non-compliant situation in another agency, the first thing to do is certainly to contact the AEO of the broker concerned to resolve the issue. If this is not possible or if an OACIQ intervention is required, he may contact the OACIQ Public Assistance Department.

The roles and task sharing should be clearly defined and well communicated to the seller to avoid double representation or conflicts of interest.

Since the licensee represents the party to whom he is bound by a brokerage contract, if a team member's name appears on the brokerage contract to sell, or otherwise clearly appears as a contact person for the seller, this member obviously cannot represent the buyer for the property concerned.

Team members – seller's broker – cannot sign a BCP with an interested buyer and will have to advise that interested buyer to seek representation by another broker and sign a BCP. Team members – seller’s broker – must treat the buyer fairly and inform him that they do not represent him or defend, protect, or promote his interests. It is also essential to mention that all team members representing the seller must respect the confidentiality of information pertaining to that client.

Regardless of the rules surrounding the prohibition of double representation, whether brokers are in the same team or the same agency, the obligations regarding confidentiality or conflict of interest remain the same. Before a broker signs a brokerage contract with a buying client, he must ensure that he is able to act loyally towards the client and protect his interests. For example, if he works regularly with another broker from his agency and the latter has shared confidential information with him about his selling client, he will have to refuse to represent the buyer interested in the immovable and to sign a brokerage contract to purchase with him.

The agency executive officer (AEO) plays a key role in this situation: he must inform brokers about the impacts of teamwork, raise team members' awareness of potential conflicts of interest, and set guidelines for teamwork if necessary.

For more information, read the article entitled Best practices for teamwork.

The licensee must terminate the brokerage contract to purchase when he learns that his buying client is about to make a promise to purchase, lease or exchange on a property covered by a brokerage contract to sell (or lease) that this broker has also signed. This termination must be done before the buyer drafts his promise to purchase, lease or exchange.

For more information, see the Guideline – Conflicts of interest.

Good to know
Check out this diagram (PDF) for a better understanding of the right thing to do when a buyer is interested in a property for which the broker also has a brokerage contract to sell.

Yes. If a broker is granted one of the exceptions² indicated below,  he must immediately notify the buyer in writing and obtain his consent to continue representing him.

He may use this standard clause and insert it in the Amendments form. The exceptions are:

• Regions underserved by real estate brokerage services

A licensee may be in a double representation situation if there is no other licensee who can represent the buyer and whose establishment is situated within a 50-kilometre radius of the building for which the buying client intends to make an offer to purchase, lease or exchange.

This exception is primarily intended to ensure the availability and accessibility of real estate brokerage services in areas where supply is limited. It will be the responsibility of the licensee who wishes to benefit from the exception to check whether the conditions for its application are met. In this situation, the licensee will also need to obtain his client's written consent to continue to represent him, prior to the drafting of a promise to purchase.

• Exception for agencies

The aim of this provision is to allow two real estate brokers from the same agency to each represent their client by a brokerage contract. Therefore, a broker can represent a seller by a brokerage contract to sell and another broker, from the same agency, can represent a buyer by a brokerage contract to purchase in the same transaction.

In such a case, the agency must implement strong measures to ensure that all obligations to protect the respective confidential and strategic information of the selling and buying client are met. 

Remember that a broker acting on his own account, just like a broker acting on behalf of an agency, cannot represent both the seller and the buyer. The term represent means to be bound by a brokerage contract with the client. To "represent" a seller or buyer, the broker shall have a written brokerage contract with the party.

That being said, it is important to remember the following, regardless of the rules surrounding the prohibition of double representation and its exceptions. Before a broker signs a brokerage contract with a buying client, he must ensure that he is able to act loyally towards the client and protect his interests. For example, if he works regularly with another broker in his agency and the latter shared confidential information about his selling client, he will have to refuse to represent the buyer interested in the immovable and to sign a brokerage contract to purchase with him.

Whether or not the broker has a brokerage contract, he must treat all parties to the transaction fairly, whether they are represented or not (s. 15 of RBR).

Treating a party fairly means providing objective information about all the facts relevant to the transaction and the rights and obligations of all parties to the transaction, while ensuring that confidential and strategic information is not disclosed.

It should be noted that the broker's duty to treat the unrepresented party fairly remains unchanged. Indeed, if the person is not represented, providing fair treatment may take the following form:

• Showing the immovable;
• Providing and helping complete a Promise to purchase form and its annexes;
• Advising to use the usual financing and inspection clauses when drafting the promise to purchase;
• Disclosing factors relevant to the transaction.

Collaborating broker without a brokerage contract

The collaborating broker without a brokerage contract works de facto for the seller and collaborates with the seller's broker. Even if he is the one who caused an unrepresented party to become interested in the property offered for sale by the seller's broker, he does not represent that party or defend, protect or promote its interests. Only brokers who signed brokerage contracts to purchase are mandated to protect and promote the interests of buyers. The collaborating broker without a brokerage contract does not represent the buyer.

However, the collaborating broker without a brokerage contract must treat the buyer fairly, i.e., providing objective information about all the facts relevant to the transaction and the party’s rights and obligations, while ensuring that confidential and strategic information is not disclosed.

To make sure the buyer understands this clearly, the collaborating broker without a brokerage contract must give the buyer a written notice explaining his role, obligations and remuneration method. This notice includes an acknowledgement of receipt from the buyer confirming that he has read the notice and has received relevant information to fully understand its scope.

Good to know
To represent a buyer, i.e. defend his interests, advise him based on his needs and criteria and negotiate the terms of an offer to purchase on his behalf, the broker must have signed a brokerage contract to purchase (BCP). Only brokers who signed brokerage contracts to purchase are mandated to protect and promote the interests of buyers.

To understand the roles and responsibilities of brokers in different scenarios, see the guide Clarifications on the amendments to the Act (PDF).

See more details in the Guideline– Conflicts of interest.

Yes. Part of providing fair treatment includes the obligation to disclose factors that are relevant to the transaction.

The broker providing fair treatment must therefore disclose information about the property to any prospective buyer, right from the beginning of the process. Due to the sensitive nature of the personal information it contains (name and signature of the seller), the DS form must be given only to those prospective buyers interested in drafting a promise to purchase.  

Brokers are reminded that treating a party fairly means providing objective information about all the facts relevant to the transaction and the rights and obligations of all parties to the transaction, while ensuring that confidential and strategic information is not disclosed. It is important to note that the obligations relating to fair treatment that a broker must provide to an unrepresented party have not changed with the coming into force of amendments to the REBA in June 2022.

To be able to represent a client and protect and promote his interests, the broker must sign a written brokerage contract with him. Among other things, representing a client allows you to:

• defend his interest;
• advise him according to his needs and criteria;
• negotiate the terms of a transaction on his behalf;
• protect his personal and other strategic information;
• put the property on the market.

Good to know
To understand the roles and responsibilities of brokers in different scenarios, see the guide Clarifications on the amendments to the Act (PDF). 

No. It is not possible to represent a buyer without first signing a written brokerage contract to purchase with him. A broker without a brokerage contract is considered a "collaborating broker without a contract". He works de facto for the seller. He can only treat the buyer fairly. Only brokers who signed brokerage contracts to purchase are mandated to protect and promote the interests of buyers. The remuneration of the collaborating broker without a brokerage contract is then established based on the remuneration sharing provided for in the BCS.

To make sure the buyer understands this clearly, the collaborating broker without a brokerage contract must give the buyer a written notice explaining his role, obligations and remuneration method. This notice includes an acknowledgement of receipt from the buyer confirming that he has read the notice and has received relevant information to fully understand its scope.

Also, when signing the brokerage contract to purchase, the broker must inform the buyer in writing that the contract could be terminated if he wanted to present a promise to purchase for an immovable for which he is also acting as the seller's broker, i.e. in the case of double representation. In this case, the broker must use this standard clause. He may insert it in section 10.1 ("Other declarations and conditions") of the form Exclusive brokerage contract – Purchase – Chiefly residential immovable containing less than five dwellings excluding co-ownership or insert it in the Annex G - General form, which must then be attached to the brokerage contract to purchase.

See more details in the Guideline– Conflicts of interest.

Good to know!
To understand the roles and responsibilities of brokers in different scenarios, see the guide Clarifications on the amendments to the Act (PDF).

Yes, FARCIQ is the professional liability insurer for all real estate brokers and agencies.

Coverage applies insofar as the claim is based on allegations of fault committed in the course of the real estate broker's duties (except as provided in the insurance policy).

The broker who signs a BCP with the buyer becomes the "buyer's broker." His compensation must be specified in the BCP (section 6 provides for this). Based on what is indicated in the BCP, he can also receive the compensation due to him under the brokerage contract to sell (BCS). In this case, the compensation indicated in the BCP is reduced by the amount that the seller’s agency or broker will share in accordance with the BCS.

If the compensation specified in section 6 is less than what is received in sharing (e.g.: 0.5% in the BCP while the BCS provides for a 2% sharing), the buyer's broker will be compensated based on the compensation sharing agreement set forth in the BCS. The buyer's broker will receive 2% from the seller.

Conversely, if the compensation specified in the BCP is superior to what is received in sharing (e.g.: 3% in the BCP and 2% in the BCS), the buyer's broker will receive 2% from the seller and the remaining 1% will need to be paid by the buyer. The remaining 1% of the compensation could be financed using clause R2.5 of Annex R or paid cash directly by the buyer.

Remember that only brokers who signed brokerage contracts to purchase are mandated to protect and promote buyers’ interests.

In addition, the recent practice of BCPs with "0%” compensation (i.e. a contract that provides for no direct compensation from a buyer) is not recommended. In this case, the broker does not only challenge his professional independence, but also runs the risk of not being able to receive compensation for the services rendered. A buyer might also wonder whether his broker is deliberately diverting his interest from properties advertised by unrepresented sellers or for which there is no reasonable compensation sharing from his point of view. This phenomenon called steering goes clearly against the rules of ethics.

See more details in the Guideline– Conflicts of interest.

Good to know

If the transaction is between a seller's broker and an unrepresented buyer, but a "collaborating broker without a brokerage contract" intervenes in the transaction, the latter's remuneration is based on the remuneration sharing provided for in the BCS. Remember that only brokers who signed brokerage contracts to purchase are mandated to protect and promote buyers’ interests. The collaborating broker without a brokerage contract does not represent the buyer; he works de facto for the seller.

To understand the roles and responsibilities of brokers in different scenarios, see the guide Clarifications on the amendments to the Act (PDF).

No. The Act does not provide for a transition period. The new rules apply as of June 10, 2022.

Yes. the new regulation does not have any impact on the validity of the promises to purchase presented (or accepted) before June 10, 2022.

The broker is considered to be in a situation of double representation when his buying client signs a promise to purchase for a property for which the broker holds a brokerage contract to sell.

The broker is considered to be in a situation of double representation when his buying client signs a PP for a property for which the broker holds a BCS.

Example:

• If your buying client with whom you have a written BCP signs a promise to purchase on or before June 9, 2022 for a property for which you also have a brokerage contract to sell, you may continue to act for both clients since double representation will only be prohibited as of June 10, 2022. You may continue representing the buyer. If this transaction is not concluded and your buying client signs another promise to purchase on or after June 10, 2022 for another property for which you hold a brokerage contract to sell, the double representation prohibition will apply and you will have to terminate the brokerage contract to purchase, unless one of the exceptions applies.

Signing of a brokerage contract to purchase:

• You must inform your buying clients without a brokerage contract to purchase that since June 10, 2022, you must enter into a written brokerage contract with them to continue representing them. Otherwise, you cannot represent them, i.e. you cannot protect and promote their interests.

• Also, when signing the brokerage contract to purchase, the broker must inform the buyer in writing that the contract could be terminated if he wanted to present a promise to purchase for an immovable for which he is also acting as the seller's broker, i.e. in the case of double representation. In this case, the broker must use this standard clause. He may insert it in section 10.1 ("Other declarations and conditions") of the form Exclusive brokerage contract – Purchase – Chiefly residential immovable containing less than five dwellings excluding co-ownership or insert it in the Annex G - General form, which must then be attached to the brokerage contract to purchase.

Absence of a written brokerage contract to purchase:

• If by June 10, 2022, the broker has not concluded a written brokerage contract to purchase, he will act as a collaborating broker without a brokerage contract with his former buying clients and he must henceforth work de facto for the seller. He no longer represents or defends, protects, or promotes buyers’ interests. Also, if the broker does not have a written brokerage contract, he can only provide fair treatment. Only brokers who signed brokerage contracts to purchase are mandated to protect and promote buyers’ interests.

• To make sure the buyer understands this clearly, the collaborating broker without a brokerage contract must give the buyer a written notice explaining his role, obligations and remuneration method. This notice includes an acknowledgement of receipt from the buyer confirming that he has read the notice and has received relevant information to fully understand its scope.

No, the remuneration sharing provided for in the brokerage contract to sell must be the same for both the buyer's broker (who has a written and signed brokerage contract with his buying client) and the collaborating broker who has no brokerage contract. The seller's broker must collaborate in the same way with the other broker, whether or not the latter has a brokerage contract, and comply with the rules applicable in this regard. He must share his remuneration with the other broker or agency involved in the transaction in accordance with the conditions indicated in his brokerage contract and in such a way as not to compromise the completion of the transaction. Remember that only brokers who signed brokerage contracts to purchase are mandated to protect and promote buyers’ interests.

The seller's broker must inform the unrepresented buyer that he  cannot represent him and defend his interests.  He must inform him that he can only treat him fairly. He must recommend that the buyer be represented by another broker.

Should the buyer ask him to refer him to a broker to represent him, the seller's broker may do so. However, if he does so, he must not give the buyer the name of a single broker, as this could lead to the appearance of a conflict of interest. Therefore, he must refer him to a few brokers.

Also, for the same reason, a broker who refers a client to another broker cannot receive compensation for referring this client since he himself is involved in the transaction and would be in a conflict of interest or apparent conflict of interest.

The same applies to the buyer's broker in a double representation situation who must terminate his brokerage contract. In fact, he cannot receive compensation for recommending a broker to the buyer.

Under the new section 29.1 of the REBA, a licensee may not claim compensation following the termination of a brokerage contract  to purchase when he is in a double representation situation.

Remember that the broker must avoid placing himself in a conflict of interest in all circumstances. The law does not give the licensee the choice between avoiding or disclosing a conflict of interest. The licensee must avoid placing himself in a conflict of interest at all times.

Therefore, the obligation to disclose the conflict of interest is not an option or an opportunity for the licensee. It is not meant to provide a loophole that prevents the licensee from committing an ethical breach.

In addition, the situation is different when the broker refers a client to another broker and he is not involved in the transaction. 

For more information, see the Guideline– Conflicts of interest.

To represent a tenant, i.e. to advise him based on his needs and criteria, to negotiate the terms of a promise to lease and to present it on his behalf, the broker must sign a written brokerage contract with him. However, there is no specific brokerage contract form for leasing. Brokers must not use the mandatory form BCP, even with adaptations. This is because the nature of the transaction is completely different and the changes that should be made could lead to too many errors.

The amendments to the REBA do not change the interpretation of the principle of efficient cause of sale.

Remember that in order to ensure that the buyer understands his rights and to avoid disputes between brokers, it is important that the seller's broker inform the buyer at the very first opportunity of the following:

1. He represents the seller only;

2. He cannot represent him or defend his interests;

3. He advises him to seek representation by another broker with whom he will have a brokerage contract to purchase;

4. If he chooses not to be represented by another broker, he can only treat him fairly.

Regarding the “efficient cause of the sale”

The OACIQ does not intervene in remuneration disputes between brokers or agencies, regardless of whether or not they are members of the Quebec Professional Association of Real Estate Brokers (QPAREB). If the brokers are members of the QPAREB and a dispute arises regarding the payment of remuneration, they must resort to the Conciliation and Arbitration Service of this association.

For more information:
Receipt of a promise to purchase that is not drafted on an OACIQ form: Broker's obligations

Since June 10, 2022, a broker is required to enter into a written brokerage contract to represent a client.

To this effect, five mandatory brokerage forms have been modified on June 8, 2022 and brokers must used these new versions in their residential transactions. For more information, read this article.

To represent the seller or lessor in the residential sector, the broker must use the following forms:

• Chiefly residential immovable containing less than five dwellings (mandatory forms):

  • Exclusive brokerage contract – Sale – Chiefly residential immovable containing less than five dwellings excluding co-ownership (revised); or

  • Non-exclusive brokerage contract – Sale – Chiefly residential immovable containing less than five dwellings excluding co-ownership (new).

  • Promise to purchase – Chiefly residential immovable containing less than five dwellings excluding co-ownership (revised)

  • Declarations by the seller of the immovable – Chiefly residential immovable containing less than five dwellings excluding divided co-ownership (revised)
     

• Divided co-ownership (mandatory forms):

  • Exclusive brokerage contract – Divided co-ownership – Fraction of a chiefly residential immovable held in divided co-ownership

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

  • Declarations by the seller of the immovable – Divided co-ownership

• Undivided co-ownership:

  • Exclusive brokerage contract – Undivided co-ownership – Share of a chiefly residential immovable held in undivided co-ownership

  • Promise to purchase– Share of a chiefly residential immovable held in undivided co-ownership

  • Declarations by the seller of the immovable – Chiefly residential immovable containing less than five dwellings excluding co-ownership with the necessary adjustments.
     

• Residential leasing:

  • Exclusive brokerage contract – Residential lease

  • Promise to lease – Residential

• Residential lot (recommended form):

  • Exclusive Brokerage Contract  – Sale – Immovable

  • Promise to purchase - Immovable

  • Declarations by the seller of the immovable – Chiefly residential immovable containing less than five dwellings excluding co-ownership with the necessary adjustments.

To represent the buyer or lessee in the residential sector, the broker must use the following forms:

• Chiefly residential immovable containing less than five dwellings (mandatory form):

  • Exclusive brokerage contract – Purchase – Chiefly residential immovable containing less than five dwellings excluding co-ownership (BCP) (revised)

• Divided or undivided co-ownership: 

  • A specific form adapted to divided co-ownership is being developed by the OACIQ. Prior to its coming into effect, the broker may use the BCP form with the necessary adjustments, including:

    • Replacing the form title with the following, as appropriate:

      • Exclusive brokerage contract – Purchase – Divided co-ownership – Fraction of a chiefly residential immovable held in divided co-ownership; or
      • Exclusive brokerage contract – Purchase – Undivided co-ownership – Share of a chiefly residential immovable held in undivided co-ownership
         

    • Replacing the NOTE at the beginning with the following text, as appropriate:

      • “This form must be used when an exclusive brokerage contract for a fraction of a chiefly residential immovable held in divided co-ownership is signed with an individual”; or
      • “This form must be used when an exclusive brokerage contract for an undivided co-ownership – Share of a chiefly residential immovable held in undivided co-ownership is signed with an individual.”

      • The broker may also use an in-house form based on the BCP form.

• Residential leasing – Lessee:

  • the broker must use an in-house form based on the BCP form.

• Residential lot:

  • the broker may use the BCP form with the necessary adjustments, including the form title and the note at the beginning.

First of all, the option of signing a non-exclusive brokerage contract is not new; this option has always existed. However, before June 8, 2022, the broker had to amend the brokerage contract to sell to add a clause indicating that it was a non-exclusive brokerage contract.

The only new thing in this regard is that since June 8, 2022, a mandatory brokerage form was introduced for cases where consumers wish to sign such a non-exclusive brokerage contract. For greater transparency for consumers, the legislator has decided to inform them of the possibility of using an exclusive (EBCS) or non-exclusive (NEBCS) brokerage contract to sell. These two forms include a paragraph indicating that both formats exist.

Whether or not brokers offer their clients the option of signing a non-exclusive brokerage contract, they must inform the seller that this option exists and that he or she could enlist the services of another broker who agrees to sign non-exclusive brokerage contracts. However, a broker is not obligated to sign non-exclusive brokerage contracts to sell with a seller who wishes to avail himself of this option. The broker and the seller are free to do business together or not.

Moreover, whether the brokerage contract to sell signed with the broker is exclusive or non-exclusive, this does not prevent the seller from selling his property by himself. This is not a new rule. It was also possible to do so previously in accordance with the law and jurisprudence.

It is recommended that brokers use standard clause 1.10 if the seller and broker agree that the seller will also market his property. This standard clause governs the obligations of the selling client, such as notifying the broker(s) involved in the transaction if he receives a promise to purchase, listing the property at the same price and conditions, etc.

The broker may also indicate in the "Other declarations and conditions" section (clause 11.1), an advertising plan that will be used, such as the agency's website or social networks.

To conclude, it is important that consumers be informed of the option to enter into a non-exclusive  brokerage contract to sell if they wish. However, a broker is free to accept it or not, in which case he or she may refer the seller to other brokers who offer a non-exclusive brokerage service. The licensee could be compensated for referring the seller to another broker who offers this service. In such a case, he would not be personally involved in the transaction and therefore would not be in a conflict-of-interest situation. Remember that any compensation agreement for the benefit of a licensee must be immediately disclosed in writing to the prospective contracting party. The licensee's notice shall be sent by any means providing proof of the date and time of its receipt.  

For more information in this regard, watch this video. Other information on the changes to brokerage forms is also available in this article.

¹ Loi donnant suite à des mesures fiscales annoncées à l’occasion du discours sur le budget du 25 mars 2021 et à certaines autres mesures, LQ 2021, c. 36, art. 31, 32, 195, 199.
² Art. 16.1 et 17 du Règlement sur les conditions d’exercice d’une opération de courtage, sur la déontologie des courtiers et sur la publicité (C-73.2, r.1).