The seller remains free to refuse a Promise to purchase even if it meets all the conditions in the brokerage contract

Note: This judgement was rendered under the old Real Estate Brokerage Act (R.S.Q. c. C-73.1) and regulations applicable at that time of which the enforcement was entrusted to the ACAIQ (now known as the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)). Therefore, the following text refers to the vocabulary applicable at that time. However, the following analysis remains relevant under the Real Estate Brokerage Act (R.S.Q. C-73.2) that came into force on May 1, 2010 and amended in June 2018.

The case Lavoie vs. Succession Bernier

In 2010, the Court of Appeal, the highest court in Québec, handed down a major decision for real estate brokerage in a case where the Association des courtiers et agents immobiliers du Québec (ACAIQ) – now the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ) – appeared, first in the trial court, and later in the Court of Appeal, to argue its position. The appellate court had to determine whether a Promise to purchase that includes all the conditions in the brokerage contract constitutes an acceptance of the seller’s offer to sell, and whether the latter was therefore obliged to accept it. The Court of Appeal ruled that this is not the case.

The facts in this case were as follows: First, a buyer signed a Promise to purchase (PP) for the asking price appearing on the description sheet, without any conditions. Soon after, but before the PP was presented, another person signed a PP for an amount higher than the asking price. The seller refused the first of the two promises to purchase and accepted the second one. The Court of Appeal ruled that the seller was free to refuse the first of the two promises to purchase.

A Promise to purchase that meets all the conditions of the brokerage contract does not constitute acceptance of an offer to sell within the meaning of the Civil code of Québec

In support of its conclusion that a Promise to purchase that matches all the conditions contained in the brokerage contract does not constitute acceptance of an offer to sell within the meaning of the Civil Code of Québec, the Court of Appeal stated as that in accordance with accepted practices, the Real Estate Brokerage Act assumes that the job of the broker is not to present to the general public a formal offer to sell from his client, but rather to seek the best possible offer to purchase. If the detailed description sheet prepared by the broker includes all the essential elements of the contract under consideration, the fact that the seller retained the services of a broker indicates clearly that the detailed description sheet is not an offer to sell within the meaning of the Civil Code of Québec.

In addition, the Court of Appeal indicated that in accordance with the Real Estate Brokerage Act and the regulations thereunder, certain forms, including the Promise to purchase and the Counter-proposal to a promise to purchase, are mandatory. There is no mention of a form that would be an offer to sell. Brokers must work with promises to purchase and counter-proposals; their job is not, nor do they have the right, to get a potential buyer to sign an acceptance of a so-called offer by the seller.

This decision does not impact the broker’s right to remuneration

The Court of Appeal indicated, however, that its decision has no impact on the broker’s right to be remunerated for the work he does if the seller refuses a Promise to purchase that matches the conditions in the brokerage contract.

Statement to be added to the description sheet

Section 118 (5) of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising states that any property description sheet or similar document intended for the public and describing an immovable covered by a brokerage contract must specify, when the brokerage contract is for the sale of the immovable, that the document or property description sheet is not an offer or a promise that may bind the seller, but is an invitation to submit such offers or promises. Therefore, despite this order from the Court of Appeal, you should still continue to include on any detailed description sheet or similar document a statement to the effect that it does not constitute an offer or a promise that could bind the seller, but rather an invitation to present such offers or promises.