Does your professional insurance cover you in the event that a transaction is conducted while you are outside Québec?

Knowing the limits of your insurance coverage is essential, especially when selling or leasing an immovable or a business located in Québec, while you or one of the parties is outside Québec.

New communication technologies and the growing use of telecommuting in recent years have changed the world of work, and the real estate brokerage industry is no exception.

While in-person interactions remain relevant, brokers and clients no longer routinely need to meet physically to exchange and sign documents.

This ability to communicate effectively at a distance also allows a broker to work from abroad while ensuring effective follow-up for his clients. The same is true for sellers and buyers, who can manage their transactions while they are temporarily outside Québec.

But what about your professional liability insurance policy? Does it offer protection in the event that, in the course of a transaction concerning an immovable located in Québec, you take steps from outside Québec, or you act for the benefit of one of the parties who is temporarily out of the province? Here is what you need to know.

The notion of fault committed within the boundaries of the province of Québec

Whether the brokerage transaction is in the residential or commercial sector, your professional liability insurance policy will cover you only if the claim is based on an alleged fault committed within the boundaries of the province of Québec¹.

This wording may leave you wondering whether the insurance coverage will apply if you are working from abroad or if your advice is received by the client while he himself is abroad. The first question to ask to determine the territorial scope of your insurance coverage is whether the property being transacted is located within the boundaries of Québec.

Thus, depending on the insurer’s analysis, you could benefit from the same coverage whether your email is sent from your usual place of business or from outside the province, as long as the transaction involves an immovable located in Québec. Still, the following caveats should be noted.

The elements to consider

It is important to note that, although you or your client may be abroad, compliance with ALL your professional obligations remains paramount. Among other things, you must ensure that your client, whether buyer or seller, receives all the relevant information and advice appropriate to the situation or to the document to be signed. You will also have to carry out all the verifications to which you are normally bound.

In certain situations, it may be difficult for the broker, because of distance or time difference, to adequately meet all his obligations. When this is the case, the broker should enlist the help of a colleague in Québec.

You should also keep in mind that you will need a secure Internet connection in order to protect the personal information that you receive from your clients and other stakeholders.

In order to be covered by your professional liability insurance policy, any legal action must have been brought before a Canadian court. We encourage you to read this article on synbad.com, which rightly recommends the use of a specific clause to be inserted in brokerage contracts or transaction proposals when one of the signatories, including the broker, travels or resides temporarily outside Québec².

In all cases, the fault must be related to the professional activities described in your insurance policy. In addition to the requirement that the fault be committed within the boundaries of the province of Québec, other criteria set out in your policy will need to be verified in order to determine the eligibility of the claim against you.

Remember that it is your duty to inform the FARCIQ of any actual or potential claim.

If you plan to be working abroad in the near future, make sure you know the rules regarding the practice of real estate brokerage in the location where you will be. A prudent broker will avoid placing himself in a situation of illegal practice. This verification is your responsibility; the OACIQ and its insurance fund (FARCIQ) cannot advise you on this matter.

In short, nothing prevents a broker from following up on his files while he is abroad. Keep in mind, however, that distance can present certain challenges to the broker’s ability to carry out his duties and obligations properly. Why not enlist the help of a colleague who will follow up on your files in your absence, while you enjoy your leisure time?

Refer to the table below to assist you in your decision.

Prevention is the best solution!