1 Obligation to protect and promote the interests of the person represented

1.1 Obligation to have a written brokerage contract

The brokerage contract must be in writing¹ and a duplicate of the contract must be given to the client.² In addition, since June 10, 2022, it is no longer be possible to enter into a verbal brokerage contract in the residential field, whether for the sale, purchase, lease or exchange of a property. Section 26 of the Real Estate Brokerage Act (REBA) will be amended so that as of that date, any verbal contract will be null and void, meaning that a licensee will no longer be able to represent a party under a verbal brokerage contract.

“26. The contract cannot be invalidated on the sole grounds that one of its provisions contravenes this chapter or that the mandatory form evidencing the contract has not been filled out. However, any verbal contract is void.”

Also, the second sub-paragraph of section 14 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising (RBR) will be repealed to exclude any situation of representation or intermediation without a written contract.³

“14. A licence holder represents the party to whom the holder is bound by a brokerage contract. A licence holder not bound by a brokerage contract represents the party who has requested the holder to act as an intermediary. (…)”

Therefore, knowing that it is common for licensees to represent buyers without signing a brokerage contract to purchase, it will be important to change this widespread practice, i.e., to no longer act for the buyer without first signing a written brokerage contract to purchase with him.

¹ Section 24 of the Real Estate Brokerage Act
² Section 25 of the Real Estate Brokerage Act
³ Section 15 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising

1.2 Obligation to protect and promote the interests of the person represented

A licence holder represents the party to whom the holder is bound by a brokerage contract.

The licensee is considered to represent the client once he becomes bound to that client by a brokerage contract. Therefore, he must protect and promote the client’s interests first and foremost.⁵ In other words, he must put his client's interests before his own.

In this context, the term “interest” is defined as:

• what constitutes a benefit;
• what is important;
• appropriate;
• or favourable to a natural or legal person concerning their physical, material, intellectual and moral good.

The interests of the client must always come before those of the licensee. The licensee must always act with loyalty and in the best interest of the person he represents.⁶

He may not make any representations that go against the person he represents.⁷ He may not disclose any confidential or strategic information concerning this party or the proposed transaction, unless authorized to do so in writing by the person represented.⁸ He must inform him objectively.⁹

Therefore, the obligation to protect and promote the interest of the person represented by the licensee is fundamental in matters of ethics.

¹ Section 14 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
² Section 15 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
³ Section 15 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising and Section 21 of the Real Estate Brokerage Act
^4-5 Section 15 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
⁶ Section 83 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising

1.3 "Double representation" prohibition or the obligation to represent only one party

The real estate broker's primary duty is to promote and protect the interests of his clients and to act with loyalty towards 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 will be prohibited as of June 10, 2022.

The section 29.1 was added to the Real Estate Brokerage Act.  It shall enact 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. ”

Therefore, if the licensee is bound by a brokerage contract to sell and a brokerage contract to purchase:

• He shall 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 licensee 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 licensee shall advise his buying client to conclude a new brokerage contract to purchase with another licensee. However, the buying client is not required to use the services of another licensee. In fact, the buyer may elect to enter into the transaction without being represented by a licensee.
• When the licensee terminates the brokerage contract to purchase and the buyer chooses to enter into the transaction with no representation, the real estate broker must treat him fairly.
• The licensee shall not claim any compensation from the buyer after this termination.

Similarly, if the licensee is bound by a contract to lease:

• He shall notify the lessee of the termination of his brokerage contract with him. The brokerage contract shall be terminated by operation of law upon the licensee sending (not receiving) or submitting a substantiated written notice to his client explaining the double representation prohibition rule.
• By terminating the brokerage contract, the licensee shall advise the lessee to conclude a new brokerage contract with another licensee. However, the lessee is not required to use the services of another licensee. The lessee may elect to conclude the transaction without being represented by a licensee.
• When the licensee terminates the brokerage contract and the lessee chooses to conclude the transaction with no representation, the real estate broker must treat him fairly.
• The licensee shall not claim any compensation from the lessee after this termination.

1.4 Duty to provide fair treatment to the unrepresented party

In a transaction, if the other party is not represented, the licensee is required to provide fair treatment to that party.¹ Since the other party is not represented by a brokerage contract, there is no "double representation" here.

The licensee represents only one of the parties to the transaction (the buyer or the seller, the tenant or the landlord) and protects only the interests of that party. He does not represent the interests of the unrepresented party, since he would be violating his duty to act with loyalty towards the party he represents. In addition, it would be difficult for him to disregard the confidential and strategic information he holds about that party and the proposed transaction.

Even if it’s the licensee who caused the unrepresented person to become interested in a property he marketed, he does not "represent" that person. He must tell him that he is required to protect and promote his client’s interests and that he can only treat him fairly.

Treating the unrepresented party fairly means, among other things, that the licensee must inform that party objectively. That obligation extends to all the material facts relevant to the transaction and to its object, and must be fulfilled without exaggeration, concealment or misrepresentation².

Also, "informing objectively" within the meaning of section 83 of the RBR means, among other things, that the licensee shall inform the unrepresented party not only of the fact that he does not represent the party, but also that the party has the option to seek representation by a licensee of their choice. This unrepresented party can be either the buyer of the seller.

For example, the licensee's fair treatment provided to the unrepresented party may take the following form:

• Advising the unrepresented buyer to use usual financing and inspection clauses in his offer to purchase. However, he may not disclose confidential or strategic information of the client he represents;
• Providing and completing a blank Offer to purchase form and its annexes for the unrepresented buyer;
• Suggesting that the unrepresented seller be represented by a broker and informing him objectively about the steps of the transaction if he still does not wish to use the services of a broker to represent him.

¹ Section 15 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
² Section 83 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising

1.5 A licensee who represents one of his relatives

The licensee is not in a conflict-of-interest situation when he represents a relative (colleague, friend, family member, business partner, creditor, company of which a family member is a shareholder or director, etc.) insofar as his loyalty is in the interests of that relative, independently of his own personal interests. It can be presumed that the licensee is then promoting and protecting this relative who is his client since his judgment and actions are in favour of the latter. Therefore, the broker's interests are not in conflict with those of this relative who is his client. There is no conflict between the interests of the party represented by the licensee and those of the licensee; the latter does not give precedence to his own interests.

That being said, the real estate broker who represents a relative must be aware that he may not have all the independence and objectivity required to inform properly advise this close client. It is recommended that he inform this relative.

In addition, the real estate broker must treat the other party fairly and inform them objectively, without concealment. Thus, in the context of a transaction for which the broker is bound by a brokerage contract to a relative, he must inform the other party of the relationship between him and his client.

Indeed, the relationship between the real estate broker and his relative may give the impression that the broker is unable to meet his ethical obligations to treat all parties to the transaction fairly and objectively.

The OACIQ does not have a pre-established form for this type of situation. For the sake of transparency, it is good practice to inform the other party in writing. For example, he may advise the other party by email that he represents his brother, colleague or friend, but that he has no interest in the immovable his client is selling or buying. He should ask the other party to confirm receipt of the email and keep the proof on file.

If the real estate broker has an interest in the property of a friend or family member, he may still represent them, but he must, in accordance with his regulatory obligations, disclose this fact in writing and without delay and obtain an acknowledgement of receipt from the prospective contracting party before even drafting a promise to purchase. He may then use the form designed by the OACIQ Notice of disclosure of the real estate agency or broker (Purchase – Sale – Loan) or his own “in-house” form as long as it contains all the information required by sections 18 to 21 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising (c. C-73.2, r.1).

Examples of situations in which a real estate broker representing a close relative must disclose his or her interest in writing and without delay: 

• The broker represents his spouse for the sale of the family home or any other property in which he holds an interest
• The licensee (broker or agency) represents his business partner for the sale of an immovable or an enterprise in which he holds an interest
• The broker represents the liquidator of a succession in which he holds an interest as an heir.
• The broker represents his brother for the purchase of a residential immovable on behalf of a company in which he also has interests.