Which copy goes to whom when signing a contract?
Notice to reader
Please note that the following article has not yet been updated since the coming into force of the new Real Estate Brokerage Act on May 1, 2010. The OACIQ positions which are conveyed in this article may have evolved since the date of its publication. It is your responsibility to ensure, at all times, that you are acting or that you are exercising your rights or recourse in accordance with the Real Estate Brokerage Act, its regulations or any other applicable law.
If you have any questions, please contact the Info OACIQ Information Centre at 450 462-9800 or 1 800 440-7170, or by sending us a message.
By Manon Bonnier, lawyer Legal Affairs Department
The Info ACAIQ information center has observed a lack of uniformity among real estate brokers and agents in their submissions of the signed copies of a promise to purchase. The proposal, response and acknowledgment of receipt of a promise to purchase imply that a copy has been given to the signing party. But which copy goes to whom? Pay attention to the brokerage contract! Failure to submit a copy to the seller may lead to serious repercussions. What are they? To ensure that we're all on the same wave length, we recommend the following procedure:
The Promise to Purchase
The promise to purchase is made up of three different pages with four carbon copies, making twelve pages all together. Each of these copies is considered to be an original, since they contain a handwritten signature in accordance with the rules for mandatory forms (1). You are already aware of this: signing a promise to purchase can sometimes seem like a ceremony for ratifying a country's constitution! But caution is required, as we are after all selling a home, not just a T.V. So the promise to purchase is three pages long, with four copies each. Who receives each copy? The answer can be found in the stages of the promise to purchase itself.
1. To begin with, the buyer signs all copies of the promise to purchase. He must keep the last copy of each of the three pages.
2. Next is the seller, who accepts, refuses or makes a counter-proposal to the promise to purchase. The seller must then sign each of the remaining copies and keep the last copy.
3. We then return to the buyer, who will sign the acknowledgment of receipt of the seller's response. Once again, he signs and keeps one copy.
4. Who receives the remaining copy? Although there is no written rule on this subject, we recommend that the contracting real estate broker (that is, the person who is bound by the brokerage contract with the seller) keep this copy, in accordance with section 135 3° of the By-laws of the ACAIQ. We recommend that the collaborating broker keep a photocopy for his files after giving the original to the contracting broker.
We also recommend that the seller be given a photocopy of this last copy. The reason for this is simple: the seller will have clear evidence that notification of the buyer's response has in fact been given, and proof that the promise to purchase is not null and void.
The Brokerage Contract
For residential properties, the brokerage contract must be in written form. This is to ensure your compensation. In fact, in the case of chiefly residential immovable with less than five dwellings belonging to a natural person, the Real Estate Brokerage Act specifies that the contract signed between the broker and the owner of the immovable be in writing:
33. The contract is formed when both parties have signed it.
Giving a copy to the seller
The brokerage contract is in duplicate. Even if the top copy of the contract makes a copy with carbon paper, both are still considered to be originals since they both carry original signatures. It should be noted that, under the Real Estate Brokerage Act, the broker has the obligation of submitting a copy of the contract to the seller:
34. The broker must give a duplicate of the contract to the natural person who signed it.
Each of the two parties keeps a contract with his original signature and the signature of the other party. But what happens if, after signing the contract, the broker does not give the copy to the seller immediately? This will alter the seller's obligations. The seller is only bond to execute his obligations upon receipt of a copy of his contract (section 34). A seller could therefore refuse to pay the compensation to his broker because he had never been given a copy of his contract!
The right to rescind the contract
Failure to provide the seller with the copy of his contract also has an important legal consequence. The seller may only take advantage of the right to rescind as of receipt of the contract:
40. Notwithstanding any stipulation to the contrary, the natural person may, at his own discretion, cancel the contract within the three days which follow the day on which he receives a duplicate of the contract signed by both parties, unless a waiver is written in its entirety by the person and signed. The contract is cancelled by operation of law from the sending or giving a written notice to the broker.
So, in residential transactions, don't forget: no brokerage contract, no compensation. The owner of the immovable must be given a copy of the contract as soon as it is signed.
1. Section 88, paragraph 2 of the By-laws of the Association des courtiers et agents immobiliers du Québec.