Refused transaction promises • A reminder on broker and agency obligations

When a transaction promise is refused or becomes null and void due to the absence of reply, several brokers have gotten into the bad habit of not forwarding the promise to purchase and other transaction documents to their agency, thus violating the provisions of the Real Estate Brokerage Act.

Because transaction promises are signed, it is important never to destroy these documents. This obligation is especially important in case of simultaneous promises to purchase, as you could be required to prove the existence of these other promises should the case be submitted to the Assistance Service or the Syndic following a complaint by one of the parties. Like all other brokerage records and registers, these must be retained by the agency for a period of six years.

It is important to remember therefore that under current regulations, as was the case in the past, brokers must forward to their agency WITHOUT DELAY all documents completed in the performance of their duties, whether or not a transaction actually takes place. Fulfilling this obligation is crucial to allow the agency to discharge its own obligations regarding the maintenance of records and registers.

How should the agency dispose of refused or unanswered transaction promises?
When the object of the transaction is an agency listing, refused transaction promises must be filed in the Record of brokerage contracts.

When the object of the transaction is not an agency listing, transaction promises that were refused or unanswered must be kept by the agency in a single record entitled “Record of refused or unaccepted transaction promises”. It is not necessary, however, to enter these transaction promises in the agency’s Register of transactions since there was no agreement between the parties.

The “Record of refused or unaccepted transaction promises” should not contain transaction promises that were initially accepted but late became null and void (e.g. for non-fulfilment of certain conditions within the prescribed deadline, refused mortgage application, etc.). An accepted transaction promise requires the opening of a transaction record and an entry in the Register of transactions as soon as the promise is accepted.

Just like they have an obligation to maintain their own records and registers, sub-franchised agencies must also have their own “Record of refused or unaccepted transaction promises”, kept separately from that of the franchised agency.

This obligation concerns everyone!
Of course, these guidelines are not only for brokers working in residential brokerage, but also for those working in commercial brokerage. In commercial brokerage, refused leasing promises (or other documents) must also be forwarded to your respective agencies to be processed as above. In real estate brokerage, whether residential or commercial, all these documents are important!

Verifications are made during inspection visits to ensure that this procedure is followed by brokers and agencies. The topic is also covered in the education activity Keeping of records and registers, regularly presented by the OACIQ.