Can a promise to purchase be withdrawn?
Take a typical scenario: a broker has a promise to purchase in hand and is preparing to present it to the seller. The phone rings: the buyer informs him that he no longer wants to buy the immovable or present the promise to purchase. What should the broker do?
Clause 14.1 states that a promise to purchase is irrevocable until the deadline indicated on it. In other words, as soon as the seller has the promise to purchase in hand, the buyer can no longer withdraw it, for as long as the promise to purchase is valid. However, the Civil Code of Quebec does provide the buyer with a small window in which he can withdraw the promise, i.e. the period between the moment when the promise to purchase is signed and the moment when it reaches the seller. Where the seller receives a revocation before the promise to purchase, the promise lapses(1). However, under the Real Estate Brokerage Act, the broker or agency executive officer must submit any transaction proposal as soon as possible(2).
In the typical scenario described above, the broker must inform the buyer that he must send the seller a revocation of his promise to purchase as soon as possible, while taking into account that the promise to purchase must also be submitted as soon as possible. In all cases, the broker must refrain from himself taking the steps to withdraw the promise to purchase.
Upon presentation of the promise to purchase, and to allow the seller to make an informed decision, the broker must notify the seller of the buyer’s intention not to proceed with the transaction. This scenario reminds us of the importance of informing the buyer that his promise to purchase will bind him to the seller the moment he signs it.
To summarize, the broker must:
- at all times inform a buyer that his promise to purchase binds him to the seller as soon as he signs it;
- if a buyer informs him that he no longer wishes to buy the immovable or present the promise to purchase, the broker must indicate to the buyer that he must send to the seller, as soon as possible, a revocation of his promise to purchase, given that the broker is obligated to submit any transaction proposal he receives as soon as possible;
- when submitting the promise to purchase, the broker must inform the seller of the buyer’s intention not to proceed with the transaction.
(1) Section 1391 of the Civil Code of Québec
(2) Section 102 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising