Published on: October 03, 2014
Article number: 121343

Residential immovable: mandatory forms and statements in any brokerage contract or transaction proposal concerning the sale, purchase, exchange or lease

(Update of the article published on June 20, 2012)

To ensure a better protection of public, the OACIQ published mandatory forms regarding chiefly residential immovables containing less than 5 dwellings. These forms were designed taking into account the rules provided in the Regulation respecting contracts and forms. We will deal with them in the first part of this article. Then, we will discuss the mandatory statements that brokers must include in their contracts or transaction proposals regarding a chiefly residential immovable containing less than 5 dwellings, in particular cases where the forms do not necessarily have to be used by brokers.

1) Mandatory forms regarding residential brokerage

The OACIQ published and made the following forms mandatory:

  • Exclusive brokerage contract – Sale – Chiefly residential immovable containing less than 5 dwellings excluding co-ownership
  • Exclusive brokerage contract – Divided co-ownership – Fraction of a chiefly residential immovable held in divided co-ownership
  • Exclusive brokerage contract – Undivided co-ownership – Share of a chiefly residential immovable held in undivided co-ownership
  • Exclusive brokerage contract – Sale – Mobile home situated on leased land
  • Exclusive brokerage contract – Residential lease
  • Declarations by the seller of the immovable
  • Exclusive brokerage contract – Purchase – Chiefly residential immovable containing less than 5 dwellings
  • Amendments
  • Amendments – Residential lease
  • Enhancements prior to acceptance
  • Annex RC – Remuneration and Costs
  • Promise to purchase – Chiefly residential immovable excluding co-ownership
  • Promise to purchase – Fraction of an immovable held in divided co-ownership
  • Promise to purchase – Share of an immovable held in undivided co-ownership
  • Promise to purchase – Mobile home situated on leased land
  • Promise to lease – Residential
  • Counter-proposal
  • Counter-proposal – Residential lease
  • Annex F – Financing
  • Annex R – Residential

Brokerage contract forms– Sale
The forms of brokerage contract – sale are mandatory for the sale of a chiefly residential immovable containing less than 5 dwellings by a natural person, share of a residential immovable held in divided co-ownership, share of an immovable held in undivided co-ownership or, as set out below, a mobile home placed on a chassis, with or without a permanent foundation if it is situated on a leased land.

Brokerage contract form – Purchase
The form of brokerage contract – purchase is mandatory when the broker decides to be contractually bound in writing with a natural person for the purchase of a chiefly residential immovable containing less than five dwellings. It enables the broker to be remunerated by the buyer (natural person) for the purchase of such immovable. In the absence of a brokerage contract – purchase, the buyer (natural person) will have no contractual obligation to the broker.

Forms for the sale of mobile homes located on leased land
As announced in the Pro@ctive of February 5, 2014, the use of forms designed specifically for the sale of a mobile home placed on a chassis, with or without a permanent foundation and located on a leased land will become mandatory on January 1, 2015. In addition to the brokerage contract, a promise to purchase form has also been developed. Like all the forms used until now, this form is mandatory regardless of whether or not the seller is a natural person.

Annex RC, Amendments and declarations by the seller
The Annex RC – Remuneration and costs form is a mandatory annex to any mandatory brokerage contract, where appropriate. The Amendments form is also mandatory to amend a mandatory brokerage contract. The Declarations by the seller of the immovable form is a mandatory annex to any mandatory brokerage contract to sell.

Furthermore, as recently indicated, the Amendments form has undergone some changes, such as the removal of the “ENHANCEMENT OF THE PROMISE TO PURCHASE (PRIOR TO ACCEPTANCE)” section which is now included in the Enhancements form that will be discussed below. The amended version of the form will become mandatory on January 1, 2015. It will no longer be possible as of that date to use the current version of the form.

Promise to purchase forms
Moreover, brokers must use the promise to purchase forms edited by the OACIQ for the purchase of a chiefly residential immovable containing less than five dwellings, share of a residential immovable held in divided co-ownership, a share of an immovable held in undivided co-ownership or a mobile home located on leased land. These forms are mandatory regardless of whether or not the seller or the buyer is a natural person.

Enhancements prior to acceptance form
As of January 1, 2015, the Enhancements form will necessarily have to be used to enhance a mandatory promise to purchase form for a residential immovable prior to acceptance.

It will have to be used to amend a promise to purchase, prior to acceptance, when the amendment is to enhance the promise, i.e. make it more advantageous for the seller, more consistent with or superior to the wills and requirements expressed in the description sheet.

Annex F, Annex R and Counter-proposal
Annex F and Annex R forms are annexes to the mandatory promise to purchase and must be used where appropriate. The Amendments and Counter-proposal forms must also be used to change or respond to a mandatory promise to purchase.

Residential lease forms (Exclusive brokerage contract – Residential lease, Promise to lease – Residential, Counter-proposal - Residential lease, Amendment – Residential lease)
Like all brokerage contracts, the Exclusive brokerage contract – Residential lease form must be used when a brokerage contract is signed with a natural person for the lease of a dwelling located in chiefly residential immovable containing less than 5 dwellings, whether or not held in divided or undivided co-ownership.

Moreover, the Promise to lease – Residential and Counter-proposal – Residential lease forms are mandatory to conclude the lease of a dwelling by a natural or legal person or a corporation, regardless of the number of dwellings that the immovable contains. They must also be used to lease a dwelling held in divided or undivided co-ownership.

Finally, the Amendments – Residential lease form is mandatory under the same circumstances as the forms it amends, i.e. the Brokerage contract or Promise to lease.

Obligations provided in certain forms
The Regulation respecting contracts and forms stipulates that it is prohibited for a broker to amend in any way whatsoever a form edited by the OACIQ relating to a contract or a proposal concerning a residential immovable to decrease his obligations or increase to his benefits those of the party he represents.

In residential brokerage, failure to comply with the mandatory minimum content requirements and, if applicable, to use the mandatory form prevents the broker from claiming or receiving remuneration from the party he represents.

Mandatory statements and use of OACIQ forms
In the case where the OACIQ forms are not mandatory, such as contracts regarding a residential immovable concluded with a legal person or a company, the Regulation respecting contracts and forms imposes statements that the broker must include in all his residential brokerage contracts or transaction proposals. However, if desired, the broker can also decide to use the OACIQ mandatory forms (e.g.: when concluding contracts concerning a residential immovable with a legal person or a company) or use the OACIQ recommended forms which will be designed, in accordance with the requirements of the regulation, to deal with some particular situations, for example an Exclusive brokerage contract - Sale - Immovable.

2) Mandatory statements in a brokerage contract or a transaction proposal concerning the sale, purchase, exchange or lease of a chiefly residential immovable containing less than five dwellings in cases other than those covered by the mandatory forms

The Regulation respecting contracts and forms is now imposing a mandatory minimum content for any brokerage contract concerning a residential immovable. Here is the content:

1) The identification and contact information of parties;

2) The subject and term of contract;

3) The identification of the immovable or the characteristics of the immovable sought;

4) The price and terms of sale, purchase, exchange or lease of the immovable;

5) The fact that the information contained in the contract can be used only in accordance with the terms and conditions set forth in the contract or in accordance with the regulation;

6) Except in the case of a brokerage contract to purchase, remuneration sharing terms offered to the broker collaborating in the transaction and the consequences generated by the terms suggested;

7) Agency or broker remuneration method and terms of payment of that remuneration;

8) The possibility for parties to resort, in case of a dispute, to the services of conciliation, mediation, and arbitration offered by the OACIQ in accordance with the Real Estate Brokerage Act;

9) The rules set out in the regulation regarding the status of the brokerage contract when a broker ceases acting on his own account to go and work for an agency, when he changes agency or when the broker or agency ceases operating completely;

10) Any declaration by the seller or lessor concerning the immovable and relevant to the transaction ;

11) The right of termination of three days set forth in section 28 of the Real Estate Brokerage Act;

12) Any other right or obligation of the parties.

The statements which must also be contained in such contract, where appropriate, are the exclusivity of the contract, the fact that in some cases the contract cannot be terminated, authorization to transmit information about the immovable to an information listing service (e.g.: Centris) and the fact that any amounts of money received as disbursements or remuneration advance will be deposited without delay in the broker’s or agency’s general trust account and can be withdrawn only when the services have been rendered or the disbursements have been incurred, and these amounts have been billed and sent to or accepted by client.

Also note that in the absence of a stipulation regarding the date and time of the contract, the latter will expire 30 days after its conclusion. In addition, although the Declarations by the seller of the immovable form is not a mandatory annex in brokerage contracts to sell relating to a residential immovable concluded with a legal person or a company, as well as in brokerage contracts to lease or exchange such an immovable, the broker’s obligation to recommend to the seller to provide his declarations on the immovable remains.

Furthermore, the Regulation respecting contracts and forms imposes a mandatory minimum content for any transaction proposal concerning a residential immovable. The statements that should be included in any transaction proposal regarding a residential immovable are the followings:

1) The identification and contact information of parties;

2) The subject of the transaction proposal;

3) The identification of the immovable and the description of the enterprise, if applicable;

4) The price and terms of sale, purchase, exchange or lease of the immovable and the amount of the down payment deposited in the broker’s or agency’s trust account in accordance with the terms provided for the trust, if applicable;

5) The payment method of purchase, sale or exchange price, including, as the case may be, the payment terms of additional funds, new mortgage loan, assumption of obligations related to existing mortgage loans and selling price balance;

6) The inspection conditions and the transaction proposal termination conditions following inspection, if applicable;

7) The occupancy date of premises and, if applicable, terms and conditions thereof if it is subsequent to the signing of the deed of sale;

8) The terms and conditions regarding the signing of the deed of sale, lease or exchange contract by the parties;

9) The fact that any declaration by the seller or lessor of the immovable made prior to the transaction proposal constitutes an integral part thereof;

10) The acceptance conditions of transaction proposal, particularly the date and time of its expiry;

11) Any other right or obligation of parties.