Ten handy tips from the Inspection Department

As you know, small changes in field practices are always desirable and can alleviate great risks. Here are some tips based on recommendations frequently made by inspectors.

1- Know who you are dealing with

Verifying the identity of the party your represent and that of the other parties to the transaction if they are not represented by another broker is an obligation for all brokers, regardless of their field of practice. Do you always fulfill this obligation?

When checking records, inspectors often find that the information or documentation regarding the identity of the parties is incomplete or missing, especially when it comes to the buyers. For more information, we recommend visiting Guideline Preventing Money Laundering and Real Estate Fraud. 

2- Declare everything in the DS

Because of the importance of the information it contains, the Declarations by the seller of the immovable (DS) form must always be completed with great care and, again, any affirmative answer on the form must be detailed in section D14.

Inspectors very often see omissions, especially concerning questions D2.6a and b, which relate to real rights, charges and restrictions affecting the immovable. In order to make  sure the information is clear, details should be provided in section D14, including the name of the mortgage lender and, if applicable, a description of the servitude, real rights or other charges. It’s so easy to avoid unpleasant surprises! You can find the information you need to complete the DS form properly with your selling client in the Online Land Register, the deed of sale and the certificate of location.

3- Date of signing of the deed of sale and date of occupancy: be specific

A 30-day period means nothing without a starting date. A time period is only an interval between two moments, two events.

When you enter a time period on your brokerage contracts instead of a date for the signing of the deed of sale or for occupancy (for example under clauses 5.1 and 5.2, or 5.3 and 5.4 of the mandatory and recommended forms), you must specify when the period starts. For example, you could put: “30 days following an accepted promise to purchase”. Without this detail, a time period, whether it’s 30 or 60 days, has no meaning and could become a source of dispute.

4- Go ahead and draft a special clause, but make sure it’s clear

We must acknowledge that the drafting of special clauses, especially when they concern conditions, is a problem for many brokers. A well-drafted clause should always specify:

• Who must do what;
• By when;
• How the notice is to be sent to the other party to indicate, for instance, that the condition has or has not been fulfilled;
• What is the consequence of the condition on the transaction.

To help you with this, don’t hesitate to refer to the Book of standard clauses developed by the OACIQ in collaboration with the Greater Montreal Real Estate Board. These clauses come with an explanation on their use. They can be used as is or adapted to a particular situation. Remember that a clause must always accurately reflect the intention of the parties and not be open to interpretation.

You can access the Book of standard clauses via Synbad or on the electronic forms platform. It’s a simple way to avoid errors and minimize the risk of finding yourself in a conflict situation!

5- Remuneration sharing in commercial real estate also concerns the seller

What is the share of remuneration that a commercial real estate broker agrees to pay to another agency or broker in the case of a collaborative transaction?

Like in residential real estate brokerage, a real estate broker working in the commercial field must indicate in writing to the party he represents the share of remuneration he agrees to pay to another agency or broker should they collaborate in the transaction, and he must explain the impact of the proposed sharing conditions.

In addition, this information must be entered in the commercial brokerage contract record. And since you need a written contract in commercial real estate, why not include it in the contract?

6- Mandatory statements in commercial real estate brokerage contracts

When checking commercial brokerage records, it is common to find one or more mandatory statements missing from contracts and transaction proposals.

You can eliminate this problem right now by changing your contract and transaction document models accordingly. How?

If you work in commercial real estate brokerage, you will find the details in article Commercial immovable or enterprise: mandatory statements in any brokerage contract or transaction proposal.

7- Mandatory disclosures relating to loans secured by immovable hypothec

Inspectors often find missing disclosures regarding loans secured by immovable hypothec, including:

• number of lenders having extended loans in the last 12 months for which the broker or agency acted as intermediary;
• disclosures regarding the loan if it was obtained from a private lender (cost of borrowing, fees or penalties imposed to the borrower and brokerage fees if included in the amount borrowed).

Why not include specific fields in your brokerage contracts for these disclosures?

8- Document, always and still…

Regardless of a broker’s field of practice, it is important to remember that a brokerage contract record, whether in electronic or paper form, must contain the contract and all the documents used to carry it out, including any document to verify the accuracy of the information provided. As for the transaction record, in addition to the transaction proposal, it must contain any document used to complete the transaction. Also, any transaction proposal that was cancelled because conditions were  not fulfilled and any transaction proposal that was not accepted (which also includes refused loan applications) must be kept.

When you represent an agency, you must forward all documentation to the agency without delay, as the agency is responsible for the keeping of records and registers.

For more details on how to document records and where to verify information, we recommend reading article Record documentation is every broker’s business.

See also the online training on electronic document management.

The Inspection Department documents available in Synbad also include a number of quick reference guides designed to help you in your work. Don’t hesitate to use them.

9- Digitization, a major step in electronic document management

Do you keep your files on electronic media? Did you know that all the work invested to properly document a record could be lost due to improper digitization and the absence of quality control?

Digitization must allow the production of quality digitized documents, and quality control is an essential step in the process. You must ensure that the scanned document is identical to the paper document. The digitized document must be high-quality, legible, and include the same number of pages as the paper document. The pages must not be truncated, obstructed, masked, folded, etc.

Remember: if the scanned document is not the same as the paper document, it must be rescanned. The training activity Record documentation contains a section on this topic.

10- Your inspection report, available at all times on synbad.com

Have your records been verified in the course of an inspection in the past? If so, you – and your agency executive officer if applicable – would have been notified by email. Your inspection report is uploaded to My record on synbad.com, and you can view it at any time.