Published on: November 16, 2017
Article number: 204191

Receipt of several promises to purchase?

Here’s how the Real Estate Brokerage Act protects you

Your property is for sale? It’s quite possible that you receive several promises to purchase (PP). Here is how the Real Estate Brokerage Act oversees the practices of professionals authorized by the OACIQ in this context.

Your broker must present you with all the proposals received, as soon as possible upon their receipt, regardless of the chronological order of their receipt, the identity of brokers or the circumstances surrounding the presentation of promises to purchase.

As set out in the Real Estate Brokerage Act and its regulations, real estate brokers are required to act with complete transparency and fairness at each step of a transaction. That’s why your broker must inform other brokers of the existence of any promise to purchase. However, he cannot disclose its content.

After the presentation of each promise to purchase, your broker will explain possible choices, such as:

  • Accept one of the promises to purchase received;
  • Make a counter-proposal to one of the buyers;
  • Reject the promises to purchase received (see Right of refusal box).

Note: The promise to purchase has an acceptance period. If you do not respond to a promise to purchase, it becomes null and void. However, this does not mean that a seller who wishes to respond to the promise to purchase by a counter-proposal must do so within that period. Since the counter-proposal is the equivalent of a new promise to contract, it can be presented even after the expiry of the acceptance period of the promise to purchase.

Moreover, if a buyer is still interested in buying your property while the acceptance period of his promise to purchase has expired, his broker must complete a new promise to purchase on behalf of the buyer.

Enhancements

During the process, you may receive an offer enhanced by one of the buyers who already presented a promise to purchase. In fact, each buyer may modify his initial offer to make it more advantageous for the seller, as long as it is not accepted, expired or refused.

To do this, the buyer’s broker should use the Enhancements prior to acceptance form, in which he will record the terms of the enhanced offer. Note that the enhancement is not a counter-proposal.

If you have any questions about the simultaneous promises to purchase, do not hesitate to contact Info OACIQ by email at info@oaciq.com or by phone at 450-462-9800 or 1-800-440-7170.

Although I am represented by a broker, can I advertise my home and find a buyer by myself? If yes, is it possible to have a remuneration reduction from my broker?

The Real Estate Brokerage Act allows the seller to market his property at the same time as his broker. We are not talking here about a seller who himself interacts with the buyer, but about a seller who promotes his property. The seller can, for example, advertise his property on social networks.

To do this, the seller must first enter into an agreement with his broker; such agreement will be included in clause 11.1 (OTHER DECLARATIONS AND CONDITIONS) of the Exclusive brokerage contract - Sale.

Here is an example of what could be written:

The BROKER authorizes the owner to offer his IMMOVABLE for sale. Should the latter 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 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.

 

Right of refusal

Note that you have the right to refuse a promise to purchase even if the price offered meets your expectations. Your broker may, however, claim compensation for his services, as indicated in clause 7.1.2 of your Brokerage Contract.