The real estate broker’s right to compensation after the end date or termination of the exclusive brokerage contract

The information centre  Info OACIQ often gets calls from selling owners inquiring about the risk of signing a new brokerage contract on the end date or termination of the initial contract. They wonder if they are therefore released of their obligation to pay compensation under the first contract.

Everything will depend on the circumstances. Indeed, clause 7.1.3. of different exclusive brokerage contract forms developed by the OACIQ provides that, even after the end date or termination of the exclusive brokerage contract, the seller undertakes to pay compensation referred to therein, and under certain conditions. For example, in the form Exclusive brokerage contract – Sale – Chiefly residential immovable containing less than five dwellings excluding co-ownership:

“7.1.3. where a sale takes place within 180 days following the end date or termination date of this contract with a person who was interested in the IMMOVABLE during the term of this contract, unless, during this period, the SELLER concluded in good faith with another agency or another broker a contract stipulated to be exclusive for the sale of the immovable; or” (emphasis added)

For the compensation to be paid:

1) The sale should take place within 180 days following the end date or termination  of the exclusive contract;

2) The sale should be made with a person who was interested in the immovable during the term of the exclusive contract;

The concept of interested person usually refers to the person who visited the immovable. The broker should have spoken to this person to make him take interest in the immovable. Simply submitting a description sheet to a potential buyer or giving him the address to pass in front of the property is not enough to conclude that the person was interested in the immovable.

3) The seller should not have concluded, in good faith, an exclusive brokerage contract during this period with another agency or broker.

Thereby, if the selling owner signs a new exclusive brokerage contract, it’s the concept of good or bad faith that will be decisive regarding the right of the agency to claim compensation. This concept is determined with regard to the selling owner’s conduct.

For example, the selling owner may particularly be considered in bad faith if he quickly signs a new contract with the agency representing the buyer at reduced compensation, without any real marketing, to circumvent the application of the initial contract and therefore deprive the first agency from compensation. It should be noted that in this context, the agency that signed the new contract must comply with the requirements pertaining to the prohibition of double representation and could also be subject to a disciplinary complaint. Given the principle of the prohibition of double representation, the same broker cannot represent both the buyer and the seller in the same transaction.

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Last updated on: June 16, 2022
Numéro d'article: 200602