Standard clauses -1- Brokerage contract
1.2 - Exclusion of warranty for fireplaces, stoves, combustion appliances and chimneys
1.3 - Exclusion of legal warranty of quality
1.4 - Conforming promise to purchase – Additions to the detailed description sheet
1.5 - Reduced remuneration in case of promise to purchase by a designated person
1.6 - (Repealed)
1.7 - Designated persons excluded from the brokerage contract for a determined period
1.8 - (Repealed)
1.9 - Place where a possible recourse shall be exercised
1.10 - Agreement for offering the immovable for sale by the client
1.11 - Physical preparation of the premises and other deadlines
1.12 - No remuneration claim in case of a remuneration sharing agreement
1.13 - Instructions regarding the consideration period of a promise to purchase
1.14 - Notice of termination of the Exclusive brokerage contract – Purchase
1.15 - Notice regarding the exception applicable in a situation of double representation
1.16 - Warning to the buyer - double representation
1.1 – Reduced Compensation
If a promise to purchase is submitted through the BROKER or the broker representing the AGENCY identified in section 1 during the term of the contract and in fact leads to the sale of the IMMOVABLE, the broker undertakes to only claim from the SELLER a remuneration amount of ________ percent (_____%) of the selling price or a lump sum of _______________ dollars ($____________). Notwithstanding the foregoing, there shall be no reduction in remuneration in the event that one or several promises to purchase are submitted through other agencies or brokers, concurrently with a promise to purchase submitted through the BROKER or the broker representing the AGENCY identified in section 1.
Note: In accordance with Section 39 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising, the broker cannot offer to reduce remuneration should one or several promises to purchase be presented by another agency or broker and regardless of whether or not that other broker is acting on his own account and whether or not he represents the same agency him.
This clause is also included in the recommended form Annex RCOM-Reduced compensation.
1.2 – Exclusion of warranty for fireplaces, stoves, combustion appliances and chimneys
The stove(s), fireplace(s), combustion appliance(s) and chimney(s) are sold without any warranty with respect to their compliance with applicable regulations and insurance company requirements.
Note: Regulation changes and differences in the requirements of insurance companies are frequent causes of disputes after a sale. However, the proposed exclusion of warranty will not discharge the seller if he fails to disclose a defect of which he was aware (for example if he received a notice of non-compliance from a competent authority or an insurer and omitted to declare this under clauses D2.12, D12.9 and D12.10 of the form Declarations by the seller of the immovable. If this clause is used, the buyer should be advised to hire a specialist in order to have all the necessary verifications done with the appropriate authorities.
1.3 – Exclusion of legal warranty of quality
1.3.1 – Exclusion clause specific to the immediate seller
This sale is made without any legal warranty of quality from the seller; however, the buyer does not waive the legal warranties granted by previous owners and received by the seller upon purchase of the property, which are hereby assigned to the buyer.
Note: This clause provides that the immediate seller is the only owner in the immovable’s chain of ownership not to offer legal warranties. It is also possible to exclude certain former owners (e.g. friends, family, ex-spouse) that the immediate seller also wishes to protect.
The partial exclusion clause that specifically identifies which previous sellers of the immovable are concerned, if applicable, helps ensure that as many legal protections as possible are assigned to the buyer while respecting the seller’s will to protect himself against certain legal recourses.
1.3.2 – Exclusion clause on certain components of the immovable
This sale is made without any legal warranty of quality from the seller as pertains to ______________ (describe the excluded component(s)).
Note: It is possible to exclude the legal warranty of qualify on specific components of the immovable (e.g. pool, fireplace, air conditioning or heating equipment, appliances or any other aspect concerning the lot).
1.3.3 – Total exclusion clause
This sale is made without any legal warranty of quality, at the buyer's own risk.
Note: In the case of a total exclusion clause, the buyer waives not only the warranty offered by his immediate seller, but also all warranties offered by previous sellers of the immovable, even if they sold with the legal warranty. The total warranty exclusion clause is more suitable for exceptional situations such as a succession, a repossession, a building to be demolished, or a change of use.
It is also possible to modulate this clause by excluding the specific liability of the immediate seller or by excluding the warranty regarding certain specific components of the immovable, such as the swimming pool or any other aspect concerning the land. See standard clauses 1.3.1 and 1.3.2 or standard clause 3.5 Promise to purchase.
If the legal warranty of quality exclusion is requested by the seller from the beginning, this clause should be included in the section “Other declarations and conditions” of the appropriate brokerage contract to sell form or, if there is insufficient space, in an Annex G – General form.
Regardless of the media used, any detailed description sheet or similar document, intended for the public, describing an immovable covered by a brokerage contract, must indicate whether the whole immovable is being sold without legal warranty of quality.
It is important to explain to both the seller and the buyer the consequences of a total or partial exclusion of warranty of quality on their rights and obligations and on the marketing of the immovable. In all cases, given the serious nature of these consequences, the broker must recommend that the parties seek legal advice. An inspection of the immovable that takes the exclusion of warranty into account should be recommended to the buyer.
1.4 – Conforming promise to purchase – Additions to the detailed description sheet
This is not an offer or promise to sell that could bind the seller to the buyer, but an invitation to submit promises to purchase.
Note: In accordance with real estate brokerage regulations, a detailed description sheet or similar document, intended for the public, describing an immovable covered by a brokerage contract to sell, must contain a statement to this effect.
With this statement, the seller's prerogative to refuse any promise to purchase presented is maintained, subject to compensating the agency or the broker in case of a conforming promise to purchase.
For more information, read this article: The seller remains free to refuse a promise to purchase even if it meets all the conditions in the brokerage contract
1.5 – Reduced remuneration in case of promise to purchase by a designated person
Included in the recommended form Annex RCOM-Reduced compensation
1.6 – (Repealed)
1.7 – Designated persons excluded from the brokerage contract for a determined period
This brokerage contract does not apply regarding any promise to purchase presented on the IMMOVABLE by the person(s) hereinafter designated, and accepted by the SELLER within _____ days following the signing of the brokerage contract: ________.
The SELLER undertakes to keep the AGENCY or the BROKER informed without delay, in writing, if such a promise to purchase is received.
As soon as all the conditions of this accepted promise to purchase have been fulfilled, with the exception of the signing of the deed of sale and the payment of the purchase price, the SELLER shall notify the AGENCY or the BROKER without delay, in writing. This contract shall be terminated by operation of law as of the receipt by the AGENCY or the BROKER of this written notice, and no remuneration referred to in clause 7.1 of the brokerage contract will be due to the AGENCY or the BROKER by the SELLER.
Note: The old clause 10 (18) of the mandatory ACAIQ brokerage contract form, which called for the non-payment of compensation with regards to certain designated persons, no longer exists. To cover this situation, the broker may now use the above standard clause, which states that the brokerage contract does not apply to the persons designated under the conditions indicated.
If this standard clause is used, it should be included in the section “Other declarations and conditions” of the appropriate brokerage contract to sell form, or, if there is insufficient space, in an Annex G – General form. The seller’s broker must indicate under this standard clause the name(s) of any person(s) already interested in the immovable; the phrase “anyone who visits the property” is not acceptable. The seller’s broker must disclose without delay to all other brokers, using the detailed description sheet, the fact that there are one or more designated persons excluded from the brokerage contract. The seller’s broker must also notify all buyers’ brokers who are collaborating in the transaction, without delay, if a promise to purchase is received from a designated person. In addition, if the brokerage contract is stipulated to be irrevocable or non-terminable, the broker must include a statement to the effect that this condition applies subject to the content of this standard clause (e.g. “This contract is non-terminable, subject to the stipulations contained in the clause entitled “Designated persons excluded from the brokerage contrac tfor a determined period”). Without this statement, the termination mechanism provided in this standard clause would be inoperable. It should also be noted that if this clause is used, it must be included at time of signing of the brokerage contract; it cannot be added once the term of the contract has begun.
1.8 – (Repealed)
1.9 – Place where a possible recourse shall be exercised
In the event of a dispute arising from the obligations of the AGENCY or the BROKER under this CONTRACT, the parties irrevocably agree that any recourse against the AGENCY or the BROKER shall be exercised exclusively in the courts of Québec.
Note: For more information, read the FARCIQ’s capsule on the Territorial applicability of your insurance policy
1.10 – Agreement for offering the immovable for sale by the client
The owner could offer his IMMOVABLE for sale. Should the seller himself find a buyer, the remuneration indicated in clause 7.1 of the brokerage contract will be reduced to ______% of the sale price or $_______.
Notwithstanding the foregoing, there will be no decrease of remuneration should:
a) one or many promises to purchase be presented through real estate brokers, including the broker(s) identified in the exclusive brokerage contract, concurrently with a promise to purchase submitted directly by a buyer; or
b) should the buyer choose to be represented by his own real estate broker.
In this case, the owner will pay the remuneration specified in clause 7.1 of the brokerage contract.
The owner-seller agrees to notify immediately the agency or broker identified in the brokerage contract before accepting or refusing any promise to purchase submitted directly by a buyer. If applicable, the broker will complete the required forms.
The owner-seller agrees not to advertise any condition other than those contained in the brokerage contract, including the price, in any representations or advertisement he may make.
Note: The agreement under which the owner can offer his immovable for sale must be well regulated to avoid any sources of conflicts regarding whether it is the broker or the seller who found the buyer, the right to claim total or partial remuneration, and the advertised selling price. It is essential that this agreement be part of the brokerage contract by using the above statements in clause 11.1 of the Brokerage contract to sell.
For more information, read this article: Exclusive brokerage contract: can the broker authorize his client to offer the immovable for sale by himself?
1.11 – Physical preparation of the premises and other deadlines
The parties agree to postpone the marketing of the IMMOVABLE and the sending of information about the IMMOVABLE to subscribers of information listing services (clause 6.1) no later than _________ 20___ for any of the following reasons that delay the marketing of the IMMOVABLE:
the physical preparation of the premises is underway;
the broker’s verification of the accuracy of certain information following the signing of the brokerage contract is delayed for reasons beyond his control.
Postponing information dissemination and marketing is at the SELLER’s express request.
The SELLER understands that the BROKER or the AGENCY will not carry out any promotional activities to offer the IMMOVABLE for sale, including any advertising, listing on an information listing service, installation of a sign or visit to the IMMOVABLE before the date scheduled for disseminating information and marketing indicated above.
The contract shall remain in effect for all other rights and obligations set out thereunder.
Note: In accordance with the regulations and clause 6.1 of different brokerage contracts for the sale of an immovable, the broker is required to send the information contained in a brokerage contract to an information listing service or a similar service if the seller so requires. He must do so when the marketing of the property and the performance of the brokerage contract begin.
However, this clause helps delay the marketing AND listing of the immovable on an information listing service under the exceptional circumstances described therein. It’s therefore an exceptional measure that must be used by the broker only at the seller’s express request and under the specified circumstances.
It is therefore important to explain to the seller the consequences of postponing the dissemination of information and marketing.
If this clause is used, it must be included in clause 11.1 of different brokerage contracts, because it’s an amendment of clause 6.1.
1.12 – No remuneration claim in case of a remuneration sharing agreement
Notwithstanding the remuneration indicated in clause 6.1 of this contract, the AGENCY or the BROKER will not be entitled to any remuneration from the BUYER in case he is entitled to receive remuneration from another agency or broker under a remuneration sharing agreement.
Note: This standard clause may be used to provide for remuneration claim conditions other than those indicated in clause 6.1 of the brokerage contract to purchase. If used, it will be indicated in clause 10.1 of the brokerage contract to purchase form.
1.13 Instructions regarding the consideration period of a promise to purchase
The SELLER instructs the AGENCY or the BROKER to inform the buyers, or the brokers representing them, that he agrees not to respond to any promise to purchase received concerning the IMMOVABLE before __________ at _____ :______.
Note: Considering the broker’s duty to collaborate and to treat every party to the transaction fairly, the instruction must be given by the seller no later than the time of receipt of a first promise to purchase concerning the immovable.
If this clause is used and where it amends a mandatory brokerage contract form, it must be included in clause 11.1 of various brokerage contracts and in the Amendments form.
Deadline and time of presentation shall be indicated in the listing sheet, even in the context where these instructions result from an amendment to the brokerage contract. The broker must also explain to the seller the risks associated with this strategy, including the fact that it could discourage certain prospective buyers.
For more information, read the article Special requirements on the part of the seller and obligation to present any promise to purchase as soon as possible.
1.14 - Notice of termination of the Exclusive brokerage contract – Purchase
FILL OUT THE SECTIONS M1 “REFERENCE TO PRINCIPAL FORM”, M5 “OTHER AMENDMENTS” and M7”SIGNTURES”.
FILL OUT THE SECTION M5 “OTHER AMENDMENTS” AS FOLLOWS:
NOTICE OF TERMINATION OF THE BROKERAGE CONTRACT
The AGENCY or the BROKER became aware that the BUYER intends to make a proposal to purchase, lease or exchange an immovable covered by another contract entered into by the AGENCY or the BROKER for the purposes of its sale, lease or exchange.
In accordance with section 29.1 of the Real Estate Brokerage Act (CQLR, c. C-73.2), the AGENCY or the BROKER notifies the BUYER that the brokerage contract identified in section M1 is terminated by operation of law as of the date this notice is sent or delivered. The AGENCY or the BROKER may not claim any remuneration following this notice of termination.
Therefore, section M6.1 does not apply to the form identified in section M1.
The AGENCY or the BROKER advises 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.
Note: Since June 10, 2022, section 29.1 of the Real Estate Brokerage Act has prohibited double representation in the residential field. When your buying client is about to make an offer to purchase (lease or exchange) an immovable for which you also hold a brokerage contract to sell (BCS) (or represent the agency under such a BCS), you must terminate the brokerage contract to purchase (BCP) with the buyer by sending him a written notice to that effect. The BCP is terminated upon the sending or delivery of the notice, and you may no longer represent the buyer from that time.
You may use this sample notice of termination.
Your notice of termination must:
- be in writing and sent or delivered to all buyers identified in the BCP;
- clearly indicate the date of sending or delivery which constitutes the date of termination of the BCP;
- identify the immovable concerned;
- contain a recommendation to the buyer to enter into a new BCP with another OACIQ licensee.
Although not prescribed by law, it is recommended that written confirmation of receipt of the notice of termination be obtained from the buyer to ensure that the buyer is aware that you are no longer representing him and to allow him to enlist the services of another licensee, if necessary.
If the buyer remains unrepresented (i.e., he has not entered into another written brokerage contract to purchase with another licensee) after the termination of your BCP, you are required to treat him fairly. You cannot then claim to represent or defend the buyer’s interests, i.e. to advise him based on his needs and criteria, to negotiate the terms of a promise to purchase and to present it on his behalf. Treating the unrepresented buyer fairly requires you to provide him with objective information about all the facts relevant to the transaction and the rights and obligations of all parties to the transaction, whether or not they are represented.
Exceptions. You are not required to terminate the BCP if you are benefiting from any of the exceptions set forth in section 16.1 of RBR:
- there is no other agency or broker who may act as the buyer's intermediary and whose establishment is located within a 50-kilometre radius of the immovable concerned;
- the broker representing the agency under the BCP is not the same as the broker representing that agency for the purposes of the brokerage contract to sell (BCS), when the buyer wishes to make an offer to purchase on the immovable covered by the BCS.
If you are subject to an exception, see standard clause 1.15 Notice regarding the exception applicable in a situation of double representation.
1.15 - Notice regarding the exception applicable in a situation of double representation
FILL OUT THE SECTIONS M1 “REFERENCE TO PRINCIPAL FORM”, M5 “OTHER AMENDMENTS AND M7 “SIGNATURES”
FILL OUT THE SECTION M5 “OTHER AMENDMENTS” AS FOLLOWS:
1. NOTICE REGARDING THE EXCEPTION APPLICABLE IN A SITUATION OF DOUBLE REPRESENTATION
The AGENCY or the BROKER became aware that the BUYER intends to make a proposal to purchase, lease or exchange an immovable, while this immovable is covered by another contract entered into by the AGENCY or the BROKER for the purposes of its sale, lease or exchange.
In accordance with section 16.1 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising (c. C-73.2, r.1), the AGENCY or the BROKER informs the BUYER that they are not required to terminate the brokerage contract identified in section M1 because an exception applies:
- there is no other broker or agency whose establishment is situated within a 50-kilometre radius of the immovable for which the BUYER intends to make a proposal to purchase, lease or exchange that immovable who may act as the buyer’s intermediary;
- the broker through whom the AGENCY is acting under the contract relating to the sale, lease or exchange of the immovable is not the broker through whom the AGENCY represents the BUYER under the brokerage contract identified in section M1.
2. BUYER'S REPLY
The BUYER declares having read, understood this notice and agrees that the AGENCY or the BROKER may continue to represent him under the brokerage contract identified in section M1.
IMPORTANT: If the AGENCY or the BROKER fails to receive the BUYER's written consent before the BUYER makes a proposal to purchase, lease or exchange the immovable, the brokerage contract identified in section M1 shall be deemed to be terminated by the AGENCY or the BROKER on the date this notice is sent or delivered, and no remuneration can be claimed. In this case, it is recommended that the BUYER enter into a new contract to purchase or lease the immovable with another real estate broker or agency.
If the BUYER does not make a proposal to purchase, lease or exchange the immovable, the AGENCY or the BROKER shall continue to represent the BUYER under the brokerage contract identified in section M1.
Note: Since June 10, 2022, section 29.1 of the Real Estate Brokerage Act has prohibited double representation in the residential field. When your buying client is about to make an offer to purchase (lease or exchange) an immovable for which you also hold a brokerage contract to sell (or represent the agency under such a contract), you must terminate the brokerage contract to purchase by sending a written notice to the buyer.
You are not required to terminate the brokerage contract to purchase if you are benefiting from any of the exceptions set forth in section 16.1 of RBR:
- there is no other agency or broker who may act as the buyer's intermediary and whose establishment is located within a 50-kilometre radius of the immovable concerned;
- the broker representing the agency under the brokerage contract to purchase is not the same as the broker representing that agency for the purposes of the brokerage contract to sell, when the buyer wishes to make an offer to purchase on the immovable covered by the brokerage contract to sell.
If you are granted an exception, you must immediately notify the buyer in writing and obtain his written consent before the buyer makes an offer to purchase (lease or exchange) the immovable covered by your brokerage contract to sell. If you fail to obtain this consent, you must terminate the brokerage contract to purchase.
You may use this sample reply notice of the buyer (to be inserted in section M5). The buyer is invited to return this notice to you signed and dated in section M7. After receiving the buyer's consent, you may continue to represent him under the brokerage contract to purchase.
You cannot represent the buyer:
- if you have not received his written consent, and he has nevertheless made an offer to purchase (lease or exchange) the immovable covered by your brokerage contract to sell.
- if you have received his consent, but after he made an offer to purchase (lease or exchange) the immovable covered by your brokerage contract to sell.
In both cases, your brokerage contract to purchase is deemed to be terminated upon the sending or delivery of this notice (Exception notice) and you may no longer represent the buyer.
If the buyer remains unrepresented (i.e., he has not entered into another written brokerage contract to purchase with another licensee) after the termination of your brokerage contract to purchase, you are required to treat him fairly. You cannot then claim to represent or defend the buyer’s interests, i.e. to advise him based on his needs and criteria, to negotiate the terms of a promise to purchase and to present it on his behalf. Treating the unrepresented buyer fairly requires you to provide him with objective information about all the facts relevant to the transaction and the rights and obligations of all parties to the transaction, whether or not they are represented.
On the other hand, if the buyer decides not to make an offer to purchase (lease or exchange) the immovable covered by your brokerage contract to sell, you continue to represent him under the brokerage contract to purchase and it is not necessary to request his consent.
If you are not subject to an exception under section 16.1 of RBR, see standard clause 1.14 Notice of termination of the Exclusive brokerage contract – (s. 29.1 of REBA).
1.16 - Warning to the buyer - double representation
INSERT THIS STANDARD CLAUSE IN SECTION 10.1 OF THE BCP ("OTHER DECLARATIONS AND CONDITIONS")
OR
USE THE RECOMMENDED BROKERAGE FORM "ANNEX G - GENERAL".FILL OUT SECTION G1.
FILL OUT SECTION G2 "ADDITIONAL TERMS AND CONDITIONS" AS FOLLOWS:
WARNING
The Act provides that an AGENCY or BROKER must terminate a brokerage contract to purchase an immovable when the AGENCY or BROKER learns that the BUYER intends to formulate a proposal with a view to purchasing, leasing or exchanging an immovable that is the subject of another contract entered into by the broker or the agency, except in cases where:
There is no other broker who has his establishment situated within a 50-kilometre radius of the immovable in question;
The BUYER and the SELLER are bound to the same licensee because they have contracts binding them to the same agency, but where the BUYER and the SELLER are in fact served by different brokers, both bound to that agency.
Therefore, the contract identified above will be terminated prior to its end date by the AGENCY or the BROKER if this situation occurs and none of the aforementioned exceptions applies.
In such a case, the AGENCY or the BROKER will no longer be able to represent or defend the BUYER's interests. The AGENCY or the BROKER will represent only the seller and it will be recommended that the BUYER enlist the services of another agency or broker to represent him.
