2. Object and term of the contract
One of the sections that is different between the Exclusive brokerage contract – Sale (EBCS) and the Non-exclusive brokerage contract – Sale (NEBCS) is section 2 “Object and term of contract.”
In the EBCS, the exclusive nature of the brokerage contract that the broker signs with the seller means that he will be the only broker to offer his services to the seller. Exclusivity also means that other licence holders must refrain from soliciting the client during the term of the contract to offer their services.
If the broker and his client have entered into a NEBCS, the seller retains the right, during the term of the contract, to offer the property for sale through another agency or broker of his choice.
► DUTIES AND OBLIGATIONS OF THE BROKER
Before even meeting with the seller, and especially before entering into an agreement with him, the broker must take the necessary steps to determine whether the property is not already the subject of an exclusive brokerage contract by checking the information listing services and by asking the seller.
For more information: Guideline – Collaboration and remuneration sharing – 2. Respecting the exclusive nature of the brokerage contract.
Like the identification of the parties, the term is a mandatory part of any brokerage contract. It is established by entering the expiration date in the space provided and this must be done before signing the form. The expiration date cannot be replaced by expressions such as “until sold” or “undetermined,” since no additions can be made after the contract is signed. The Brokerage contract – Sale – Chiefly residential immovable containing less than 5 dwellings ends automatically 30 days after its signing if a date and time of expiration was not entered at the time of signing.
The right of withdrawal
Section 28 of the Real Estate Brokerage Act provides that the client may terminate the contract 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 licence holder. This right is absolute and cannot be waived by the client.
For more information: The client’s right of withdrawal in the brokerage contract: A choice to be respected
Termination of a brokerage contract
Once the three-day period for exercising the right of withdrawal has elapsed, it sometimes happens, after a few weeks, that the client decides not to sell his property. If the contract is cancellable, he can do so unilaterally, i.e. without the broker’s consent, by notifying him in writing. However, if the contract is non-cancellable, the termination can only be done by mutual agreement, which will require the use of the Amendments form (clause A2.1), on which the broker will write the new expiration date and time.
It is also strongly recommended to indicate in the brokerage contract, or on the Amendments form if this was not provided for in the contract, the terms of any agreement regarding the termination of the contract, in particular regarding the costs and expenses that the client will have to pay to the broker or any other compensation for the prejudice suffered as a result of the termination, if applicable, and on which they will have agreed. Although the Civil Code of Québec grants the client the right to unilaterally terminate a service contract, it also provides that the client has certain obligations toward the service provider.1
In the event of termination, the broker’s right to any remuneration is severely restricted, except in the event that all of the following conditions are met: the contract is stipulated as exclusive, the sale is made to someone who was interested in the property while the contract was in force, and the transaction occurs no more than 180 days after the contract expiration date, and during that period the client did not enter into a contract stipulated as exclusive with another broker.2
The situation is not the same when the brokerage contract is stipulated to be non-cancellable; in this case the seller can only unilaterally terminate the contract with the broker’s consent.
Form more information: Termination of a brokerage contract
1 Art. 2129, C.C.Q.
2 According to s. 27 of the Real Estate Brokerage Act and clause 7.1 of the form Exclusive brokerage contract – Sale
Taking a property off the market
When the contract is not cancellable and the seller no longer wants to sell, rather than agreeing to a termination of the contract, the broker and the seller can agree to take the property off the market. The broker then agrees not to take any further action to sell the property, including any advertising. The contract remains in force, but some of its obligations are suspended until it expires.
Since the brokerage contract is not cancelled and all other conditions remain in force, the seller is bound to respect his obligations. He cannot, if the existing contract is stipulated as exclusive, sell his property himself or through another agency or broker by entering into another brokerage contract. If he sells the immovable himself by accepting a promise to purchase directly, in principle the remuneration provided for in the brokerage contract becomes payable.
Like any other amendment made to the brokerage contract, the taking of the property off the market must be recorded in an Amendments form. The use of standard clause 2.1 – Off the market is recommended.
For more information: Standard clauses – 2 – Amendments to the Brokerage Contract
Immovable not available for visits
For more information: Property off the market, termination of contract and property temporarily unavailable: Concepts not to be confused
Changes affecting the agency or the broker
The seller may wish to terminate the brokerage contract because his broker is making changes to his real estate brokerage practice. This is the case in particular if the broker has stopped acting on his own account to join an agency, or if he acts on behalf of an agency and is leaving to join another agency or to act on his own account.
For more information: Properly managing the changes affecting the broker or agency bound by a brokerage contract and Notice – Agency or status change
