2. Object and term of the contract
Exclusive nature of the contract
“The BUYER retains the exclusive services of the AGENCY or the BROKER […]”
The broker must inform his client of the exclusive nature of the brokerage contract to purchase. This means that the buyer cannot use the services of someone else to bring his project to fruition. Depending on the remuneration terms and the conditions of exclusivity provided for in the brokerage contract, and based on the buyer’s declarations and obligations establishing the nature of the exclusivity, the buyer may be required to remunerate the broker representing him, even if he ends up making the purchase by himself.
Search for an immovable and agreement to purchase
“[…] to search for an immovable as described hereunder and conclude an agreement to purchase.”
The broker’s services are retained to search for an immovable. Depending on the situation, the broker will provide a description, using, among other things, clauses 3, 4, 5, and 10 of the contract. This search may include properties being sold by other agencies or brokers, properties being sold without an intermediary, and even properties that are not on the market.
The broker’s services are not limited to the search. He must also take steps toward the reaching of an agreement to purchase, which implies a role of intermediary by which he puts the buyer in contact with the seller through a variety of means. These include soliciting, analyzing, preparing transaction documents, negotiating and accompanying the client until the transaction is completed, and even beyond.
Exclusivity and collaboration
In order to reach an agreement to purchase, the broker will most likely be required to collaborate with another agency or broker to whom a seller has entrusted the sale of their property. The broker will have to do so in a manner consistent with his ethical obligation to facilitate a transaction by working with any other licensee who requests it, on reasonable terms and conditions agreed upon in advance between them.
In the traditional context of residential real estate brokerage, where the seller’s broker shares his remuneration with the buyer’s broker, the application of this rule is well established and rooted in custom and practice. However, it takes on a special meaning when the buyer’s broker has agreed by contract that his client will remunerate him.
For more information: Guideline – Collaboration and remuneration sharing
Exclusivity of contract and buyer making a purchase by himself
The notion of exclusivity concerns only the broker and, by extension, any other person who could act as intermediary in the property search and the completion of the purchase. Solely on the basis of the statement in clause 2.1, the buyer could thus retain the possibility of searching for a property on his own and purchasing it without the intervention of his broker, without causing the contract to lose its exclusive character. It is not this provision that prevents it, but other provisions, indivisible from the exclusivity statement, which are provided for in sub-section 7.1 of the contract. The buyer undertakes, during the term of the contract, not to negotiate or take steps on his own or through another person, with the owner of any immovable described in the contract. He also undertakes not to become a party to an agreement to purchase, exchange or lease any such immovable without the broker’s intermediary, as is the case with the exclusive brokerage contract to sell.
Compliance with the exclusive nature of the brokerage contract to purchase
Before entering into a brokerage contract with a buyer, the broker must take steps to determine whether the buyer has already signed a brokerage contract to purchase with another broker. In addition, the broker must not take any action that is inconsistent with an exclusive brokerage contract, such as setting up an appointment, submitting a transaction proposal or conducting negotiations directly with a seller who has entered into a brokerage contract to sell with another broker.
Term of the brokerage contract
The brokerage contract must specify a term. The broker must specify the term of the brokerage contract by entering the expiration date in the space provided in clause 2.1 of the form. The contract cannot be for an undetermined term or end at a time specified in another way (e.g.: after three months).
In the absence of a stipulation as to its expiration date, the contract expires 30 days after its signing.
The contract does not have a minimum or maximum duration, and it is up to the buyer and the broker to agree on an appropriate term. If needed, this term can be extended later on using clause A2.1 of the mandatory form Amendments.
The brokerage contract to purchase is a service contract and therefore can be unilaterally terminated by the client at any time.1
The right of withdrawal
Under the Real Estate Brokerage Act (REBA), the buyer may terminate the contract for the purchase of a residential immovable, at his discretion, within three days after receiving a duplicate of the contract signed by both parties. The contract is terminated by operation of law as of the sending or delivery of a written notice to the broker.
For more information: The client’s right of withdrawal in the brokerage contract: A choice to be respected
Termination of the contract
In addition to his right of withdrawal, the buyer can terminate the contract at any time unless he has accepted that the agreement is non-cancellable.
If the contract is cancellable, the buyer can terminate it unilaterally, meaning without his broker’s agreement, by written notice. However, if the contract is non-cancellable, the termination can only happen by mutual agreement, which will require the use of an Amendments form (clause M2.1), on which the broker will write the new expiration date and time.
According to article 2129 of the Code civil du Québec, there could be termination costs to pay.
For more information: Termination of a brokerage contract
Prohibition of double representation
The last paragraph of section 2.1 informs the buyer that in a situation of double representation, the contract, unless an exception applies, could be terminated before the end of its term, in accordance with section 29.1 of the REBA.
For more information: Guideline – Conflicts of interest: 1. Obligation to protect and promote the interests of the person represented and Frequently asked questions – Amendments to the Real Estate Brokerage Act
1 Art. 2125 and 2126 of the Civil Code of Québec
