Making sure you are well prepared
When you choose to do business with a broker for the sale of your property, you must sign an Exclusive brokerage contract – Sale or a Non-exclusive brokerage contract – Sale. The reason for this is simple: this contract, like all the forms developed by the OACIQ, is designed for your protection, to ensure that your transaction is carried out in compliance with the Real Estate Brokerage Act.
Your broker must use one of the following brokerage contract to sell forms, depending on the type of property, and clearly explain its content to you:
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Exclusive brokerage contract – Sale – Chiefly residential immovable containing less than 5 dwellings excluding co-ownership; or
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Non-exclusive brokerage contract – Sale – Chiefly residential immovable containing less than 5 dwellings excluding co-ownership; or
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Exclusive brokerage contract – Divided co-ownership – Fraction of a chiefly residential immovable held in divided co-ownership; or
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Exclusive brokerage contract – Undivided co-ownership – Share of a chiefly residential immovable held in undivided co-ownership;
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Exclusive brokerage contract – Sale – Mobile home situated on leased land
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These forms state, among other things:
- Under an exclusive contract: that your broker will be the sole intermediary with whom you will do business for the sale of your property for the term of the contract;
- your rights and obligations and those of your broker;
- Under an exclusive contract: that the broker will be remunerated for his work once you accept a Promise to purchase and all conditions are fulfilled (except the signing of the deed of sale).
- Under a non-exclusive contract: the broker will be remunerated if the property is sold during the term of the contract and the broker was the efficient cause of the sale. The broker is considered the efficient cause of the sale if a person purchases a property in which the broker has caused his interest during the term of the contract.
Talk it over with your broker
Before completing the brokerage contract, ask your broker about the ways in which he will promote your property to maximize visibility. These include advertising (e.g. newspapers, magazines, websites), signs, open houses, and listing with a dissemination service between agencies and brokers. Don’t hesitate to make suggestions!
Good to know
A broker may not modify a mandatory residential brokerage form published by the OACIQ to remove mandatory statements such as that regarding remuneration sharing conditions for brokers involved in the transaction. He also cannot make changes that would result in reducing his obligations towards you. However, he may make changes to the contract over time, for example to extend the term of the contract, modify the selling price or add new elements relating to the immovable in the Declarations by the owner of the immovable form. In this case, changes must be made using an Amendments form.
Documents to be provided to your broker
At the time of signing of the brokerage contract, or as soon as possible afterwards, you must provide your broker with:
- the certificate of location describing the immovable’s current condition;
- your deed of sale;
- invoices for any work carried out on the property (roof, windows or other renovations);
- electricity and gas statements and school and municipal tax accounts;
- any document relevant to the property, for example concerning the septic or water supply systems;
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For a co-ownership property, the declaration of co-ownership, financial statements, minutes of recent meetings, and information regarding the contingency fund.
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For an income property, copies of current leases.
Can I sell my property myself while doing business with a real estate broker?
Yes. The Exclusive brokerage contract – Sale can be modified to authorize the owner to offer his property for sale himself without affecting the exclusive nature of the brokerage contract. However, this authorization remains at the broker’s discretion and must be clearly indicated under clause 11.1 of the brokerage contract, in order to avoid any conflict arising from the source of the buyer, the right to remuneration, and the advertised selling price of the property. For more details on this, read the article entitled Exclusive brokerage contract: can the broker authorize his client to offer the immovable for sale by himself?
Understanding the clauses
1 - Identification of the parties
This clause includes, as applicable:
- the name and address of the agency (or the broker acting on his own account);
- the name and licence number of the broker and the name of his corporation (if applicable);
- your name as owner of the immovable and, if applicable, that of your representative;
- in case of a succession, the name of the seller must appear (preceded by the words “Succession of”), and the name of the person representing the deceased (liquidator) must be entered;
- If you are using a representative, you must provide the broker with a power of attorney for this person;
- If your spouse is the sole owner, you are not allowed to represent them unless they have given you power of attorney;
- If you are the sole owner, your spouse’s intervention will be required when signing the brokerage contract if:
- your immovable or a portion of it constitutes your family residence; or
- your matrimonial regime requires it.
Your identity and that of your representatives, if applicable, must be verified using one of the documents stipulated in the contract: driver’s licence, health insurance card, passport, etc. Your birthdays and respective professions must also be indicated.
2 - Object and term of the contract
This section confirms that you are retaining the exclusive services of the broker identified in the previous section. It is also where the term of the contract is entered, as agreed to with your broker. If no date or time is entered, the contract expires 30 days after signing.
3 - Summary description of the immovable
The brokerage contract must contain a description of the immovable, including:
- address;
- cadastral description;
- lot size and area.
Co-ownership properties
If the immovable is held in undivided co-ownership, the brokerage contract must specify:
- the exclusive uses relating to the share being sold;
- the area of this share;
- whether the area indicated on the certificate of location is “gross” or “net.”
Divided co-ownership
If the immovable is held in divided co-ownership, the brokerage contract must specify:
- the cadastral description of the private portion;
- whether the parking and storage spaces are private portions, common portions for restricted use, or other. If they are private portions, their cadastral descriptions must also be indicated since they are different;
- the share and cadastral descriptions of the common portions.
Your broker will ensure the accuracy of this information.
4 - Price and terms of sale
A crucial step in the process is setting a realistic asking price, while avoiding under- or over-evaluating your property.
At this stage your broker will advise you on the current state of the market by providing you with comparables. He will also help you identify the factors that can have an impact on the value of your home, such as:
- location and surroundings;
- size;
- year of construction and condition of the property;
- number and layout of rooms;
- construction materials used;
- landscaping;
- features specific to the area;
- garage, heat pump, fireplace, recent renovations, etc.
If you wish to change the asking price after your contract is signed, your broker will complete the mandatory form Amendments which you must both sign.
You must specify if your property is subject to GST or QST. Generally, the sale of a residential property that is not a new construction and has not had major renovation work done to it is exempt from GST and QST.
Good to know
An income property can include a residential portion and a portion used for commercial purposes, which would be subject to GST and QST.
Inclusions and exclusions: The question of included or excluded items must be examined closely before the brokerage contract is signed in order to avoid a potential dispute with a buyer.
Ideally, you should list all the items that could be a potential source of misunderstanding by specifying which ones are included and which ones are specifically excluded and by adding distinctive features such as colour, brand name and serial number. For example:
- garden shed;
- appliances (range, refrigerator, dishwasher);
- central air conditioner;
- heat pump;
- curtain rods (specify in which rooms);
- blinds (specify which), etc.
Good to know
- Permanent heating, electrical and lighting systems form an integral part of the immovable and are automatically included in the sale, except if expressly mentioned in the exclusions.
- The brokerage contract stipulates that the items included in the sale are “sold without legal warranty, at the buyer’s risk”. If you wish to sell these items with the legal warranty of quality, the form will have to be amended by your broker to reflect your wishes.
- Your broker must, with your help, verify any equipment or goods covered by a service or leasing contract, or any other instalment or credit sales contract. He must also find out if these contracts may be assumed by the buyer and under what conditions. On this topic, read the article Selling a property with a heat pump: Watch out for drafts!.
5 - Signing of the deed of sale and occupancy
The date of signing of the deed of sale and the occupancy date must be specified in the brokerage contract. The buyer may propose different dates in his Promise to purchase, but these are subject to your acceptance in the same way as any other clause contained in the promise to purchase, and can be negotiated.
6 - Information dissemination service
If you wish to use an information dissemination service between agencies and brokers, ask your broker to list your property with this service prior to putting it on the market. The information dissemination service selected will be indicated in the contract. Since these services are also available to all potential buyers, they offer an advantageous showcase for your property.
7 - Remuneration
The amount and terms of your broker’s remuneration must be specified in the brokerage contract. The contract must also indicate the percentage or amount that your broker undertakes to share with any other broker collaborating in the transaction. The sharing scheme proposed by your broker must be reasonable so as not to deter other brokers from proposing your property to their clients.
8 - Declarations and obligations of the seller
In this section of the form, you declare that:
- you are the owner of the immovable;
- the immovable is not the subject of a brokerage contract with another broker;
- you are a Canadian resident within the meaning of the Income Tax Act and the Taxation Act.
This section also clearly spells out your obligations, including:
- The documents to be provided to your broker (such as the certificate of location, the deed of sale, previous inspection or expert reports);
- That you will not offer the property for sale on your own or through another broker;
- That you give your broker the exclusive right to advertise your property;
- That only your broker can show your property or allow other brokers to do so (with your permission).
All the information concerning your property is entered on the mandatory form Declarations by the seller of the immovable or Declarations by the seller of the immovable – Divided co-ownership in the case of a co-ownership property.
9 - Obligations of the agency and the broker
This section lists the best practices which your broker and, if applicable, his agency, agree to uphold in accordance with the Real Estate Brokerage Act, which include performing the object of the contract loyally, diligently and competently. See the section The role of the real estate broker for more details.
10 - Change affecting the agency or the broker bound by a brokerage contract
It may happen, during the term of the brokerage contract, that your broker changes real estate agencies. In this case, you may choose to continue to do business with this broker and follow him to the new agency, remain with the current agency and change brokers, or terminate your contract. This section of the contract explains the various situations and the impact on your brokerage contract. When such a situation occurs, the agency must notify you in writing without delay.
11 - Other declarations and conditions
This is where your broker will enter any declarations or conditions pertaining to the contract (e.g. newspapers and website where you agree to have your property advertised, the non-terminable nature of the contract, the application of the legal warranty of quality for any inclusions, details regarding normal marketing actions, etc.) These declarations and conditions must be in accordance with the Real Estate Brokerage Act and the regulations thereunder.
12 - Annexes
Your broker must attach the form Declarations by the seller of the immovable to your brokerage contract. If applicable, he must also list any other annexes used, such as the Annex RC – Remuneration and costs that will be used by your broker if you have agreed with him on a different remuneration method.
13 - Interpretation
This section specifies that the Exclusive brokerage contract – Sale and the performance thereof are governed by the laws of Québec, even if you are operating from outside the country.
14 - Conciliation, mediation et arbitration
In case of dispute with your broker or the agency, the OACIQ can help. Contact the Info OACIQ information centre.
15 - Signatures
Before signing your brokerage contract, take the time to review it thoroughly with your broker. Do not hesitate to ask questions. The Info OACIQ information center can also answer your questions if necessary.
What if I want to terminate the brokerage contract?
You must fulfil your obligations under the brokerage contract from the time you receive your copy signed by you and your broker.
However, you may terminate your contract at your discretion within three days following receipt of your original copy, in accordance with your “right of withdrawal.” This right is yours, it is to your benefit and cannot be waived.
You may also terminate your brokerage contract prior to the expiration date indicated in the contract, unless it contains a clause stipulating that it cannot be terminated. If this is the case, you may not terminate it for any reason without the broker’s consent.
For his part, the broker cannot terminate his service agreement with you before the end unless he has serious reasons (e.g.: non-collaboration or obstruction on your part that prevents the fulfillment of his ethical obligations).
Good to know
Following a termination, your broker could claim costs and expenses incurred during the term of the contract, (such as advertising or mileage expenses, with supporting documentation), or a sum to compensate for the prejudice suffered (such as the amount of remuneration to which he would have been entitled). In this situation, the agency executive officer can be a good advisor.