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4. Price and terms of sale (plus taxes, if applicable)

The real estate broker must estimate the market value of a property. This estimate must be well-founded and arrived at using proper practices. To determine and provide an opinion on value, the broker can use different methods.

Comparables analysis, strategy and asking price

In residential real estate, the method best generally adapted to determine the market value of the property, with relevant information that is easy to understand for the client, is the analysis of comparables (or parity method). Depending on the information available, the situation and the purpose of the estimate, the broker could also use other methods, such as the cost or income methods. The cost method could be used when there is little or no data to make the comparisons required by the parity method. The income method could be used for multi-unit residential properties, commercial immovables or office buildings.

The principle of the parity method is to compare the property being assessed to recently sold properties with similar features. These properties are compared using various elements, such as the history of sold properties extracted from the databases of the information listing services between agencies and brokers, knowledge of the market, sector and neighbourhood, information from the municipal assessment roll or the Québec Land Register. The broker identifies these elements, assigns a value to them, and uses them as adjustment factors to determine the value of the subject property.

The broker must take such factors into account as the location of the immovable and the period at which the comparable properties were sold, as well as the variations in values over time. A comparable property sold 15 months ago does not have the same value today, and the value of the change needs to be estimated. It can also be appropriate to consider the sales history of the comparable properties.

Once this analysis is completed, the market value obtained should be compared with the asking price of other comparable properties currently on the market. Depending on the seller’s objectives and the marketing strategy employed, the broker may arrive at a different value and make that the asking price.

Under clause 4.1 of the brokerage contract to sell, the broker must enter the total asking sale price in words and numbers to avoid any ambiguity. This is the only price that can be advertised for the property.

For more information: Guideline – Representation, solicitation, promotion and advertising: 6. Advertising and Guideline – Verification, information and advice

Goods and Services Tax and Québec Sales Tax

When taking up the brokerage contract, the broker must inform the seller of the fact that at the time of sale, the property may be subject, in whole or in part, to the Goods and Services Tax (GST) and the Québec Sales Tax (QST), or to any other tax that may be imposed by the tax authorities.

The situations subject to the applicability of taxes are mainly those concerning the sale of a new immovable or one that has undergone major renovations (affecting 90% or more of the building) or the sale of an immovable of which a portion is used for commercial purposes (e.g.: multi-unit residential immovable that includes one or more commercial spaces). Under clause 4.2 of the brokerage contract to sell, the broker must check the appropriate box to indicate whether the immovable is or is not subject to taxes. If so, the seller will have to verify the amount of taxes payable with a qualified professional. This information must also be included on the detailed description sheet, as it will be needed to finalize any transaction.

This is because the taxes must be collected from the buyer by the seller. It is therefore essential to determine this at the outset in order to be able to inform any potential buyer before he presents a promise to purchase, since this will have an impact on the price he is prepared to pay.

The broker has an obligation to inform the seller that the immovable may be taxable, but it is the seller’s responsibility to provide the proportion of the immovable subject to taxes and related documentation. The broker must keep a copy of these documents in the brokerage contract record.

The same applies to tax credits that a buyer could obtain when the sale concerns a new immovable. The broker must be aware of these credits and their terms and conditions, but it is the seller’s responsibility to provide the information.

If the seller does not know the proportion in which the property may be taxable, the broker should recommend that the seller obtain this information from an expert, such as an accountant or tax specialist, and, if necessary, from the tax authorities. The seller’s annual returns will most likely contain information on this subject.

If the seller declares his immovable to be non-taxable where it is in fact taxable, he will be liable for the taxes himself.

For more information: Taxable sales: Develop the right reflexes!, Application of GST and QST to the Sale of a Building Used for Residential and Commercial Purposes and Sale or purchase of a new construction: Rules to follow

Existing loans

The broker must ask the seller about existing loans. If there is a mortgage to be discharged, the broker must indicate this in clause 4.3 of the brokerage contract to sell and enter the name of the lender.

In addition to the balance of the loan, it is advisable to check with the seller if the amount of the mortgage registered by the financial institution is higher than the amount of the loan. This could be the case if the seller has taken out a mortgage line of credit, whether to do some work on the property or for any other consumer expense. If this is the case, he will of course have to repay the balances and assume the costs of discharge and release.

It could also be a collateral mortgage, whereby a financial institution takes security for more than 100% of the value of the property, not just the value of the secured loan or the loan to which a line of credit has been added, as was traditionally done, in order to give the borrower more leeway to increase his credit with the financial institution.

If the seller does not know the features of his mortgage, the broker must consult the Québec Land Register to find out the amount of the guarantee registered there and review everything with his client by consulting the deed of loan and the loan agreement.

Fees, penalties and assumption of mortgage

Where the seller’s mortgage is not assumed by the buyer, the seller must pay off the mortgage and have it discharged, at his own expense.

Sometimes an owner wishes to sell his property before the end of his mortgage commitment. In such a case, it is very likely that the loan agreement with the financial institution provides for early repayment penalties.

The broker must verify with the seller the term of his loan and the conditions of early repayment. The broker must also ask his client some questions, review the loan documents, including the mortgage deed and the loan agreement in which the penalties are usually described, and validate the information with the lender based on the information provided by the seller on the recommended form Request for information relating to a hypothecary loan (PDF). The broker must keep proof of this information to be able to demonstrate its accuracy.

Sellers are usually aware that they will have to pay a penalty, but no matter how well informed, they are often surprised when they learn the actual amount. In some cases, it can even jeopardize a transaction when the amount is not known until the client is before the notary. In this situation, the seller may very well wish to have the mortgage loan assumed by a prospective buyer who, of course, will decide whether or not he is interested in doing so. A lower interest rate for the loan to be assumed than the rate in effect at the time of the promise to purchase could be a motivating factor for the buyer.

The broker must also obtain information on the potential terms of a possible assumption of the seller’s loan by the buyer. What will be the costs and obligations of the seller in the event that the buyer, having assumed the loan, fails to make the payments stipulated in the deed of mortgage?

In short, the broker must caution his client and obtain all relevant information by consulting the deed of mortgage.

Balance of sale price

The seller may also be willing to accept a balance of sale. He may see this as a way to facilitate the transaction or as a way to invest, for a period of time, a portion of the amount that will be owing to him at the time of the sale.

Either way, this issue must be addressed at the time of signing the brokerage contract. If it is clearly one of the conditions of the sale, it must be written into the brokerage contract and indicated in the description sheet.

For more information: Certain precautions are required for a cash purchase


The movable property which the seller proposes to include in the sale come into play when comes time to set the asking price or to accept the price offered.

The inclusion or exclusion of certain items is a major source of disputes between sellers and buyers. To prevent disputes or the inconvenience and dissatisfaction that may result, the broker (of either the seller or the buyer) must not only act with care, but also with great accuracy by using precise descriptions of each appliance, mentioning the type, make, model, colour, serial number and any other distinctive characteristics. He must do the same for any inclusion, even if they are not electrical appliances, such as rods and blinds which sellers often include.

Equipment that forms an integral part of the immovable, such as permanent heating, electrical and lighting fixtures, are automatically included in the sale by law (unless expressly mentioned in the exclusions). It is therefore unnecessary to specify them in the inclusions. But in case of doubt, it is better to spell out what is included or excluded.

Clause 4.4 of the form is reserved for the description of these inclusions. It mentions that the items are sold without legal warranty of quality, at the buyer’s own risk, but that they must be in working order at the time of delivery of the immovable. The broker must explain the significance of this to the seller, so that the seller will act with maximum transparency. The broker must also explain the effects of such a warranty exclusion to anyone proposing to buy. For example, if a dishwasher breaks a few weeks after the buyer takes possession of the property, the buyer will have no recourse against the seller, barring exceptional circumstances.

In the event that the seller wishes instead to have all of the included items sold with the legal warranty of quality, the broker must cross out the words “which are sold without legal warranty of quality, at the buyer’s own risk, but must be in working order at the time of delivery of the IMMOVABLE.” This change must be initialed by the broker and the. The broker must also state in Section 11.1 (Other declarations and conditions) or, if not, in an Annex G – General, that the items concerned are sold with the legal warranty of quality. If the legal warranty is provided for only some of the inclusions, these must be identified in clause 11.1 or in an annex, stating that they are sold with legal warranty of quality.


The need for precision is the same for the items that the seller wishes to exclude. These must be described in detail in clause 4.5 of the contract.

Service and leasing contracts

Under clause 4.6, any equipment left on the premises and covered by a service or leasing contract, the cost of which is assumed by the buyer, such as an alarm system or a water heater, must be indicated. Information regarding the service provider or lessor, monthly payment, contract term and transferability must also be provided.

Instalment sales and other contracts

The broker must separate the items that are covered by service and leasing contracts from those covered by other types of contracts and for which the seller’s obligations will also be taken over by the buyer,1 such as an instalment sales contract, trial sales contract, sales contract with right of redemption, sales contract wish resolutory clause or leasing, by identifying them under clause 4.7.

This is often the case with heat pumps or heating systems that were purchased under an instalment sales contract.

The broker must obtain and review these contracts with the seller and advise the seller to contact the merchant to ascertain the transferability of the obligations to a third party. The broker should also note in the exclusions under clause 4.5 the items purchased under these contracts that do not have to be assumed by the buyer.

For more information: Inclusions and exclusions as part of a sale – How to prevent misunderstandings, Movable property and Identifying inclusions and exclusions

1 Art. 1744, 1750 and following and art. 1842 of the Code civil du Québec

Change in asking price and terms

If, in the course of the brokerage contract, the seller wishes to amend the asking price or any other term of sale, the form Amendments will need to be complete and signed by the seller and the broker. This form expressly provides for this situation in clause M2.2.

Last updated on: May 18, 2023
Reference number: 264958