6. Disclosing information relevant to the completion of the transaction
6.1. Privilege of continuing to offer the immovable for sale, with a first refusal clause (Clause R2.2, Annex R – Residential)
6.2. On the commercial side
When collaborating in a transaction, a broker or agency executive officer must disclose to the other licence holders all the information relevant to the completion of this transaction1.
The same information must be shared with all licence holders involved. The licence holder must not favour certain brokers by sharing information that is additional to or different from that provided to others. Thus he may not provide privileged information to a broker who works for the same agency, team or banner, unless of course this broker also represents the client. Only licence holders who have a written brokerage contract with a client can have access to the strategic information concerning this client.
When the seller’s broker receives one or more promises to purchase from unrepresented buyers, he must treat these buyers fairly. This means he must provide, in an objective manner, information on all the facts relevant to the transaction as well as on their rights and obligations. Among other things, he must inform them of the existence of all promises to purchase received.
The licence holder must also disclose to all other brokers with whom he is in “collaboration mode” the existence of any transaction proposal, whether accepted or not, as soon as he learns of it, but without revealing the substance of such proposal2.
Keeping brokers and potential buyers in the dark about the existence of a promise to purchase is an unfair procedure and gives an undue advantage to the person making the offer. Furthermore, failing to disclose the existence of another promise to purchase to a buyer’s broker or to an unrepresented buyer constitutes unfair treatment of the latter, in addition to depriving the selling client of the chance to obtain the best possible price and conditions.
When there are several brokers in “collaboration mode,” there is no exception to this rule: all buyers must be informed of any new promise to purchase being presented. They need to know how many potential buyers have made a transaction proposal. The licence holder must treat all parties fairly. However, there is no requirement for the licence holder to disclose the existence of any counter-proposals, amendments or “enhancements” to promises to purchase.
The broker must present each proposal, without preference as regards the chronological order of receipt, the identity of the licence holder submitting it, or the circumstances in which the proposal was made3.
In addition, while the licence holder has an obligation to disclose the existence of any transaction proposal, he may not disclose the substance of the proposal, in whole or in part, to any other licence holder collaborating in the transaction. For example, the licence holder may not disclose the expiry date of other promises to purchase or advise an unrepresented buyer as to the amount he should offer on the promise to purchase he plans to submit. The licence holder may not provide any information regarding the price or other terms of the proposals received in order to create a bidding war.
When the seller’s broker himself receives more than one promise to purchase from unrepresented buyers, he must provide fair treatment to all parties to the transaction. This means that he must provide the same information to each party, including by notifying all prospective buyers of the existence of the other promises to purchase.
1 Section 97 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
2 Section 96 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
3 Section 102 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
6.1. Privilege of continuing to offer the immovable for sale, with a first refusal clause (Clause R2.2, Annex R – Residential)
The seller may continue to offer the immovable for sale regardless of the acceptance of a promise to purchase. If he accepts a new promise to purchase, as soon as all the conditions of this new promise have been fulfilled (excluding signing the deed of sale in the presence of the notary and obtaining cancellation of the promise to purchase), the seller must send the first buyer a notice asking him to waive the condition of sale of his own immovable or any other condition that has not yet been fulfilled, or to render his promise to purchase null and void. The notice must give the buyer a 72-hour period in which to exercise one or the other of these options.
Despite this mechanism, due to his obligation to collaborate, the seller’s broker must notify the first buyer (or his broker) of the existence of the second promise to purchase as soon as he learns of it, and not only at the time of acceptance or of sending the 72-hour notice.
6.2. On the commercial side
All brokers have a duty to collaborate. A broker engaging in a commercial transaction is not exempt from his obligation to share all information relevant to the completion of the transaction.
He must also comply with his collaboration duty toward all other licence holder, while make sure that no confidential, strategic and sensitive information concerning his brokerage contract is shared with anyone.
In order to meet his ethical obligations toward his client, the licence holder may require that any prospective buyer sign an agreement not to disseminate the information received and to keep such information confidential.
This confidentiality agreement must be consistent with the Act and its regulations.
Thus, a clause requiring the other party to assume all or part of the remuneration as a condition to a transaction violates the ethical obligation.
