Published on: April 13, 2017
Reference number: 203505

Parameters to be respected when developing a business plan

If you wish to offer real estate services, you must ensure that you comply with the Real Estate Brokerage Act. To help you, the OACIQ brings to your attention the main parameters to be considered when implementing your business model.

 

ATTENTION :

These parameters do not replace the Real Estate Brokerage Act (CQLR, c. C-73.2, also referred to as “the Act”). If there is a discrepancy between the Act and these parameters, only the Act shall prevail.

Likewise, the following shall not be interpreted as providing legal advice. Considering the specifics of each business model, we invite you to consult a legal expert for an in-depth analysis of the compliance of what you intend to implement with the Act.

 

Who can offer the services covered by the real Real estate brokerage act?

Principle

Only holders of a licence issued by the OACIQ can offer real estate or mortgage brokerage services (for more details and examples of services covered, see: What are the services covered by the Real Estate Brokerage Act?)

In addition to the specific cases listed in Exceptions, the Act provides that if you are not a licence holder, you cannot claim or receive compensation from your clients for the brokerage services provided. This means that if your clients do not pay you, you will not be able to sue them.

Exceptions

Excluded persons

The following persons are not subject to the Real Estate Brokerage Act when they are performing their duties and are therefore not required to hold a licence :

  • Lawyers and notaries;
  • Liquidators, sequestrators, trustees in bankruptcy and bailiffs;
  • Tutors, curators, liquidators of a succession and trustees;
  • Provisional administrators appointed under the Act respecting the Autorité des marchés financiers (chapter A-33.2);
  • Certified appraisers engaging in activities mentioned in paragraph j) of section 37 of the Professional Code (chapter C-26).

Excluded services

Likewise, the Act excludes the following services when they are rendered by certain categories of persons :  

  • Services rendered by forest engineers in relation to forest property;
  • Services rendered by trust companies with regard to immovable property they hold or administer for others;
  • Services rendered by certified administrators who offer their services in the course of their real estate management function (other than residential). ATTENTION : this exception does not apply to residential immovables. For such immovables, even if you are a certified administrator, you must have a licence.

Finally, the Act provides that if you offer your services to a property owner, you are not required to hold a licence if you are:

  • His or her spouse;
  • One of his or her children ;
  • His or her father or mother;
  • His or her brother or sister;
  • The sole shareholder of a legal person ;
  • His or her employee, provided that your employer is not a broker or an agency.

Special cases depending on the field in which the services are rendered

Depending on your business sector, you may also be subject to further exceptions. For more details, see: What are the services covered by the Real Estate Brokerage Act?

Violating the act?

If you wish to be compensated, but you, your company or the one you intend to incorporate are not licensed by the OACIQ, you must ensure that you do not offer services covered by the Real Estate Brokerage Act.

Otherwise you will violate the Act. More specifically, this means that you will be exposed to criminal prosecution before the Court of Québec. If you are found guilty, you will liable to a fine of not less than $1,500 nor more than $20,000 in the case of a natural person and to a fine of not less than $3,000 nor more than $40,000 in the case of a legal person.

The minimum and maximum fines are doubled for a second or subsequent offence.

Defence?

Note that in case of a prosecution in courts, the following elements do not constitute a defence:
  • Location of the immovable and place of residence of the parties

It’s not the location of the immovable or the place of residence of a seller or buyer that determines the liability of brokerage activities to the Real Estate Brokerage Act, but the place where the brokerage acts are performed. Therefore, any real estate brokerage activity carried out in Québec is subject to the Real Estate Brokerage Act regardless of the location of the immovable or the place of residence of the parties..

  • Publicity

Just because your advertisements indicate that you are not a real estate or mortgage broker does not mean that the Real Estate Brokerage Act does not apply to you.

  • Amount of transaction completed

The Real Estate Brokerage Act does not take into account the amount of financing obtained or the value of the immovable sold. You must have a licence to render a service covered by the Act.

Depending on your area of practice (residential, commercial, leasing, mortgage), when assessing the services you are offering or intend to offer, you must determine whether these services require a licence.

The services described below are subject to the Real Estate Brokerage Act.

They therefore require a licence except within the limits specified therein.

What are the services covered by the Real Estate Brokerage Act?

Your services concern residential real estate transactions (purchase, sale)

a) You must have a licence if: :

For example, you offer one or more of the services described below, for others and in exchange for compensation including:

i. Putting parties in contact to carry out a sale or purchase of a residential immovable, for instance, by: :

  • Providing information on a property ;
  • Marketing a property that does not belong to you;
  • Advertising an immovable by placing ads on the web or in newspapers for example;
  • Attending visits or making visits alone
  • Acting as a contact person between the interested parties
  • Obtaining contact information of prospective buyers or sellers to send them to real estate agencies or brokers

ii. Negotiating or offering advice, including when:

  • Marketing an immovable
  • Drafting various transaction documents for the completion of a real estate transaction
  • Presenting transaction proposals

iii. Soliciting clients to offer them your services to search for buyers or sellers (directly or indirectly, for example, by operating a website incorporating a notification system for buyers and informing them when a property that meets their search criteria is added to the website).

b)You do not need a licence if:

i. Your services are not covered by the Real Estate Brokerage Act

  • You offer your services for free. .

Attention!
Compensation is not limited to the receipt of an amount of money.

Remuneration, in the broad sense of the term, can take many forms. It may include any form of benefit received in exchange for services rendered (e.g.: trips, car, purchase coupons, profit for a company, etc.)

  • You are a superintendent or manager of a property held in divided co- ownership.

In this case, you may give a co-owner the name and contact information of a potential buyer of the co-owner’s divided co-ownership fraction or otherwise merely put them in contact with each other.

ii. You benefit from an exception

See Exceptions

Your services concern commercial transactions (purchase / sale)

a)You must have a licence if:

For example, you offer one or more of the services described below for others and in exchange for compensation, including:

i. Putting parties in contact to carry out a real estate transaction, especially by:

  • Providing information on a property
  • Marketing a property that does not belong to you
  • Advertising an immovable by placing ads on the web or in newspapers for example
  • Attending visits or making visits alone
  • Contacting interested parties
  • Providing the name and contact information of a person interested in buying to the seller
  • Obtaining contact information of buyers or sellers and sending them to different real estate agencies or brokers

ii. Negotiating or offering advice, including when:

  • Marketing an immovable
  • Drafting various transaction documents for the completion of a real estate transaction
  • Presenting transaction proposals

iii. Soliciting clients to offer them your services to search for buyers or sellers (directly or indirectly, for example, by operating a website incorporating a notification system for buyers and informing them when a property that meets their search criteria is added to the website).

b) You do not need a licence if:

i. Your services are not covered by the Real Estate Brokerage Act

  • Your services concern an enterprise whose assets, based on their market value, do not mainly consist of immovable property.

The sale of an enterprise corresponds to the sale of all tangible (palpable, such as equipment) and intangible (such as the business name and clients) property that a natural or legal person brought together to carry out commercial or industrial activity.

The transactions covered by the Act are those relating to an enterprise whose assets, based on their market value, mainly consist of immovable property.

Conversely, a transaction involving an enterprise whose assets consist mainly of movable property is not considered as a real estate transaction within the meaning of the Act.

  • You offer your services for free.

Attention!
Compensation is not limited to the receipt of an amount of money.

Remuneration, in the broad sense of the term, can take many forms. It may include any form of benefit received in exchange for services rendered (e.g.: trips, car, purchase coupons, profit for a company, etc.)

ii. You benefit from an exception

  • See Exceptions.
  • You are a member of the Ordre des comptables professionnels agréés du Québec and offer business selling services.

The sale of an enterprise corresponds to the sale of all tangible (palpable, such as equipment) and intangible (such as the business name and clients) property that a natural or legal person brought together to carry out commercial or industrial activity.

  • You are a superintendent or manager of a property held in divided co- ownership.

In this case, you may give a co-owner the name and contact information of a potential buyer of the co-owner’s divided co-ownership fraction or otherwise merely put them in contact with each other.

Your services concern leasing of immovables

a) You must have a licence if:

For example, you offer one or more of the services described below for others and in exchange for compensation, including:

i. Putting parties in contact to conclude a lease, for instance, by:

  • Providing information on the premises to be leased
  • Coordinating visits
  • Ensuring visibility and advertising of the apartment for lease.
  • Obtaining contact information of prospective lessees or lessors and sending them to real estate agencies or brokers

ii. Negotiating or offering advice, including completing a promise to lease with the lessee.

iii. Soliciting clients to offer them your services to search for lessees or lessors (directly or indirectly, for example, by operating a website with a notification system for lessees and informing them when premises that meet their search criteria are added to the website).

b) You do not need a licence if:

i. Your services are not subject to the Act

If you are in one of these situations, you do not need a licence:

  • You do not operate a business in this field.

If you offer leasing services , on an ad hoc and occasional basis, you do not need to have a licence under the Real Estate brokerage Act (e.g.: helping a neighbour, showing premises for rent)

  • You offer your services for free.

Attention!
Compensation is not limited to the receipt of an amount of money.

Remuneration, in the broad sense of the term, can take many forms. It may include any form of benefit received in exchange for services rendered (e.g.: trips, car, purchase coupons, profit for a company, etc.)

  • You offer real estate management services.

The following services are part of real estate management and do not require a licence:

- Maintaining premises
- Making submissions and phone calls when renovations are required
- Collecting rent
- Sending rent increase notices
- Conducting annual credit audits
- Making representations with the Régie du logement
 

ii. You benefit from an exception

  • See Exceptions.
  • You are a superintendent or manager of a property held in divided co-ownership.

In this case, you may act as an intermediary to:

- lease out a co-ownership fraction for and on behalf of the owner or syndicate
- give a co-owner the name and contact information of a potential tenant of the co-owner’s

  • You are a superintendent or property manager.

You can engage in property leasing. But you can do so on behalf of one property owner only.

  • You are an employee or property manager who works for a subsidiary enterprise that is at least 90% controlled by the property owner.

You can engage in property leasing. But you can do so on behalf of one property owner only.

iii. The services you offer concern the leasing of a property for a period of less than 31 days to operate a business.

Although these services are covered by the Act, the OACIQ does not currently require that a business operator hold a real estate agency or broker licence when acting as an intermediary to lease such properties, as long as he acts in accordance with the Act respecting Tourist Accommodation Establishments and its regulations, and that the OACIQ does not receive any complaint or information to the effect that the public protection may be compromised.

Your services concern mortgage transactions

a) You must have a licence if:

For example, you offer one or more of the services described below for others and in exchange for compensation, including:

i. Putting parties in contact to obtain a mortgage, including by:

  • Giving the contact information of a lender to a borrower or vice versa
  • Obtaining contact information of prospective borrowers and sending them to different real estate or mortgage agencies or brokers

ii. Offering advice or negotiating an interest rate and the terms of a loan, including by:

  • Drafting various transaction documents to obtain a mortgage
  • Following up on a loan application with a lender
  • Drawing up a financial statement to search for a loan
  • Collecting documents to prepare a credit file and sending it to potential lenders

iii. Soliciting clients to offer services to look for a borrower

b) You do not need a licence if:

i. Your services are not subject to the Act

  • You offer your services for free.

Attention!
Compensation is not limited to the receipt of an amount of money.

Remuneration, in the broad sense of the term, can take many forms. It may include any form of benefit received in exchange for services rendered (e.g.: trips, car, purchase coupons, profit for a company, etc.)

ii. You benefit from an exception

  • See Exceptions.
  • You act on behalf of the financial institution you are working for or of which you are an exclusive representative.
  • You are a member in good standing of a professional order or you or partnership governed by an Act administered by the Autorité des marchés financiers.

You may give a client the name and contact information of a mortgage lender or otherwise merely put them in contact with each other, provided you do so as an ancillary activity.

  • You are a member in good standing of the Ordre des comptables professionnels agréés du Québec

You operate a web platform

a) You must have a licence if:

Your web platform makes referrals.

Real estate or mortgage referral sites are notably those whose aim is to:

  • Obtain the contact information of a client or any other document or information to put the parties in contact
  • Contact a lender or agency to put them in contact with a client

b) You do not need a licence if:

i. Your services are not subject to the Act

  • You offer your services for free.

Attention!
Compensation is not limited to the receipt of an amount of money.

Remuneration, in the broad sense of the term, can take many forms. It may include any form of benefit received in exchange for services rendered (e.g.: trips, car, purchase coupons, profit for a company, etc.)

  • Your web platform is similar to a bulletin board where ads are displayed for a flat fee
  • Your web platform refers only to an external website without the contact information of visitors being collected from the platform you operate.

ii. You benefit from an exception

  • See Exceptions