Changing agencies successfully

When a real estate broker changes agencies, several factors need to be considered. This includes managing current brokerage contracts, handling pending promises to purchase, and how to notify clients. See below the steps to take and the impact on transactions involving residential properties.

Informing the agency executive officer

It is preferable to notify the executive officer of the agency for which the real estate broker is acting as soon as possible when the change occurs. It is the agency that is first responsible for sending the agency change notices to sellers or buyers, allowing them to exercise their options. If the agency does not send the notices, the real estate broker will have to do so. However, he must not proceed without informing his agency. Additionally, an agreement can be reached with the current agency executive officer regarding the terms of the real estate broker's departure.

Notice of agency change to be sent at any time 

Signed brokerage contract to sell or purchase

Before the real estate broker changes agencies, sellers and buyers with whom he has a contract—whether to sell or purchase—must be informed in writing that they have the following options:

• Continue to do business with the current agency (with another real estate broker whose identity will be disclosed to them in the notice); or
• Continue to deal with their current real estate broker at his new agency.
• Terminate the brokerage contract.

The clients must make their choice by the date of the agency change at the latest; otherwise, their contract will be automatically terminated, in accordance with the clauses set out in section 10 of the Brokerage contract – Sale (exclusive and non-exclusive) forms and section 9 of the residential form Exclusive brokerage contract – Purchase.

If clients respond within the specified period and decide to follow the real estate broker to the new agency, there will be no need to have them sign the Amendments form or a new brokerage contract to sell, since they will now be bound to the new real estate agency under the same conditions.

It is recommended that all signatures be obtained under the client’s reply, including the spouse’s signature if their intervention was required for the purpose of the brokerage contract. Postponing the spousal consent may cause significant harm to the seller if the consent is not obtained at the time of selling the property.

Promise to purchase (pp) in progress

The OACIQ does not recommend changing agencies while a real estate broker has transactions in progress. However, in exceptional circumstances where this is unavoidable and the client chooses not to follow the real estate broker to the new agency, who is responsible for handling the promises to purchase in progress?

Following up on a pending promise to purchase (PP) depends on several factors, including the arrangements made with both the current and future real estate agencies.

Here are the different scenarios that may arise depending on whether or not the real estate broker has a signed brokerage contract to purchase, while a promise to purchase is pending.

Pending promise to purchase with a brokerage contract to sell (BCS) in effect

• If the seller has not replied before the agency change or has chosen to continue doing business with the current agency, the real estate broker identified in the notice will follow up on the fulfilment of the conditions of the promise to purchase.
• If the seller has chosen to do business with the current real estate broker at the new agency, the broker will continue representing the client and following up on the fulfilment of the conditions of the promise to purchase.
• If the seller has chosen to no longer do business with the broker or the real estate agency, the current seller's broker will intervene–at his new agency or on his own account–solely to follow up on the fulfilment of the conditions of the promise to purchase without providing assistance beyond this stage.

Pending promise to purchase with a brokerage contract to purchase (BCP) in effect 

• If the buyer has not replied before the agency change or has chosen to continue doing business with the current agency, the real estate broker identified in the notice will follow up on the fulfilment of the conditions of the promise to purchase.
• If the buyer has chosen to deal with the current real estate broker at the new agency, the broker will continue following up on the fulfilment of the conditions of the promise to purchase.
• If the buyer has chosen to no longer do business with the broker or the real estate agency, the current buyer's broker will intervene–at his new agency or on his own account–solely to follow up on the fulfilment of the conditions of the promise to purchase without providing assistance beyond this stage.

In the absence of a brokerage contract to purchase (BCP)

Since a promise to purchase is in progress and there is no brokerage contract to purchase (BCP), the buyer should, as a courtesy, be informed in writing of the following options before the agency change:

• Continue doing business with the current agency and request that another collaborating broker be appointed.
• Continue doing business with the current broker (who drafted the promise to purchase) at their new agency.

Note: Real estate brokers cannot represent a client without a signed brokerage contract.

A real estate broker who did not sign a brokerage contract to purchase is considered as a “collaborating broker without a contract.” In this case, he works de facto for the seller and cannot offer the buyer more than fair treatment. The buyer should be reminded that neither the broker nor his (current or future) real estate agency will be able to represent his interests in the transaction unless he signs a written brokerage contract to purchase.

Remuneration

In all the aforementioned cases:

The acting notary will comply with the terms of clause 11.4 of the promise to purchase (PP) by paying remuneration to the former agency. Depending on the employment contract or departure agreement, the former agency may transmit the remuneration to the real estate broker.

If the clients decide to continue doing business with the current agency, another real estate broker will be assigned to them. The real estate broker who leaves the agency may still be entitled to remuneration, depending on what was agreed with their agency executive officer in their hiring contract or prior to their departure. Agency executive officers may agree to remunerate a broker who has left the agency, whether for brokerage contracts that were in force or for a written promise to purchase (with or without a BCP), provided that the broker was authorized to act on the agency’s behalf at the time.

Transaction documents

In all the above cases, when clients follow the real estate broker to the new agency:

A copy of the brokerage contract records will be given to the real estate broker for their new agency. The initial agency will retain a copy. If requested by the clients, the agency to which they were initially bound must also give them a copy of their record.

The transaction documents will be retained by the agency identified in the promise to purchase. In all the situations mentioned above, where the current real estate broker is responsible for following up on the fulfilment of the conditions of the promise to purchase, a copy of these documents must be given to the new agency. Note that anyone else involved in the transaction must also be notified of any change of agency (e.g., another broker, notary, or building inspector).  

Advertising

Under the brokerage contract to sell already signed, the real estate broker will be able to advertise the property under the name of the new agency or under his name if he is acting on his own account.