The real estate broker acting as the client’s intermediary or mandatary
Under section 2 of the OACIQ’s Regulation respecting brokerage requirements, professional conduct of brokers and advertising (“the Regulation”), a broker must avoid placing himself in a conflict of interest. Consequently, a broker should not accept to act as mandatary for one of the parties to a transaction in which he is acting as intermediary, especially if the power of attorney allows him to negotiate, accept or refuse proposals made a part of this transaction. In such a case, the broker should recommend that a third party be appointed as mandatary.
Also, when a real estate broker is acting as intermediary, it is also important to remember that he must refrain from making decisions for the client; rather, his obligation is to provide sound advice.
Identity of the real buyer or seller
Sometimes a party to a transaction may wish to be represented by a third party duty authorized to act as mandatary. In such cases, the broker is still required to enter the name of the real buyer or seller on the transaction documents. The name of the mandatary must also be clearly indicated, and the document must state that he is acting “for and on behalf of (name of the buyer or seller, as applicable)”.
In accordance with section 29 of the Regulation and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the identity of the mandatary must also be verified. The name, date of birth and profession or principal activity of the real buyer or seller, as applicable, must also be specified.
The broker must obtain a copy of the power of attorney and review it to determine the scope of the powers granted to the mandatary by the buyer or the seller. For instance, this power of attorney could contain provisions regarding the purchase or sale price of the immovable, or other terms and conditions that will need to appear in the promise to purchase. For a company, the power of attorney takes the form of a resolution granting its representative the necessary authorizations to carry out the transaction.