What’s an exclusive brokerage contract?
Buying, selling or leasing a residential property are important steps. That’s why, in accordance with the public protection mission entrusted to it by the Real Estate Brokerage Act, the OACIQ has designed brokerage contracts to protect your interests. And this is also why your real estate broker, as a duly authorized professional, must use them.
Here’s how these contracts help ensure a transparent and fair transaction carried out according to proper rules.
What’s an exclusive brokerage contract?
When selling, buying or leasing a residential immovable containing less than five dwellings or a co-ownership property, the exclusive brokerage contract is the means by which you agree to give a broker the right to act as an exclusive intermediary to assist you. Once the contract is signed, no other real estate broker has the right to solicit you directly. However, a mortgage broker could legitimately contact you to assist you in your process to obtain a loan because the object of the contract is different.
What does it contain?
Each brokerage contract for the sale, purchase or lease of a residential property must, among other things, include the following:
- The names and contact information of the parties;
- The object and duration of the contract;
- The identification of the immovable or the characteristics of the immovable sought;
- The price and terms (exclusions, dates, etc.);
- Rights and obligations of the parties;
- Obligations of the broker and the agency;
- Broker or agency remuneration method and terms of that remuneration;
- The exclusive nature of the contract, if applicable, and the fact that the contract cannot be terminated;
- The possibility for the 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;
- Any declaration by the seller or lessor concerning the immovable and relevant to the transaction;
- A 3-day right of termination (see below “I want to cancel my brokerage contract”).
Good to know
- The brokerage contract must be completed by your broker with your collaboration. The professional authorized by the OACIQ must provide you with all explanations required to enable you to understand and assess the services to be provided by him or by the agency he is acting for. You don’t understand a term or a clause? Don’t hesitate to mention it and ask for clarifications before signing the contract. Where necessary, contact Info OACIQ.
- The broker must check your identity and that of the other party if it is not represented by a broker. Identity is verified face-to-face or through a mandatary using a valid photo ID of your choice, such as a driver’s licence or a health insurance card.
- The fact that a residential property is or is not subject to GST and QST must be indicated in the brokerage contract.
Contracts tailored to your reality
For each type of property, there is a brokerage contract that your broker must use.
For example, if the immovable is held in undivided co-ownership, the brokerage contract will specify, among other things, the exclusive uses related to the share to be sold, the area of the share and whether the area indicated in the certificate of location is “gross” or “net.” (In this regard, read the article Gross or net area: How to find your way through.)
If the immovable is held in divided co-ownership, the brokerage contract to sell must specify, among other things, the cadastral description of the private portion.
There is also a contract to be used for transactions concerning a mobile home situated on leased land.
Beginning and end of contract
The brokerage contract is formed when the parties have signed it. Your broker will give you the duplicate of the contract. This “duplicate” should not be a simple photocopy, and you and your broker must also sign it. If the form is signed electronically, the version you receive constitutes an original contract.
Unless otherwise agreed with your broker, the contract shall expire 30 days after its making.
Upon the expiry of the contract, you can choose:
- not to renew the contract signed with your broker;
- sign a contract with another broker;
- renew the contract with your broker.
In the latter case, simply complete the Amendments form together to amend the expiry date of your contract and thus extend your agreement. Don’t forget to specify a new expiry date and time for this contract extension. Unless a new date has been agreed to with the broker and specified in the contract, the brokerage contract shall expire 30 days after the amendment. Note that the extension must take place no later than the last day provided in the contract. If the contract has expired, it cannot be extended. A new contract should be made.
I want to terminate my brokerage contract
Once the brokerage contract to sell, purchase or lease is signed, you have a period of three (3) days after the receipt of the contract duplicate signed by both parties to terminate the contract. This is called the right to cancel. In principle, this right to terminate is free of charge when you act in good faith.
However, the broker may claim compensation if a sale takes place within 180 days following the expiration of the brokerage contract with a person who was interested in the property during the term of the exclusive brokerage contract, unless a new exclusive brokerage contract has been granted in good faith to another broker. (In this regard, read article Brokerage contract: The right to change one's mind.)
After this period, if the contract is marked “non-terminable” (“irrevocable”), you may not terminate it unilaterally or without the agreement of the broker. If the contract is not marked “non- cancellable”, you can terminate it any time. However, you may be required to pay for the fees, expenses and value of services rendered by the broker or agency. (In this regard, read article Termination of a brokerage contract.)
In addition, the broker or agency could be entitled to remuneration should the property be sold, exchanged or leased within 180 days following the expiry of the brokerage contract to a person who was interested in the immovable while the exclusive brokerage contract was in force. This period may even be longer if it is proved that the seller or the buyer acted deliberately to deprive the broker of his compensation. (In this regard, read the article The real estate broker’s right to compensation after the expiry of the brokerage contract.)
For more information
- Five things your broker must do or say
- The Buyer’s Guide.
- The Seller’s Guide.
- Residential immovable: mandatory forms and statements in any brokerage contract
- Protection of Personal information
- Co-ownership transactions: Are you well-protected?
- Water supply, wells and septic tanks: duties and obligations of the broker
- Application of GST and QST to the Sale of a Building Used for Residential and Commercial Purposes
For any questions, please contact the information centre Info OACIQ.