Canada: Tabling Of Bill 141: Amendments To The Real Estate Brokerage Act

On October 5, 2017, the Government of Quebec introduced an omnibus bill proposing a major reform of Quebec's financial sector, including amendments to the Real Estate Brokerage Act. The adoption of the Bill is subject to the usual parliamentary procedures.

Summary of Bill 141 Regarding Amendments to the Real Estate Brokerage Act

In its current version, Bill 141 (hereinafter the "Bill") amends the Real Estate Brokerage Act (chapter C-73.2)  (hereinafter the "Act") to, in particular:

  • define real estate brokerage contracts ;
  • transfer supervision and control of mortgage brokerage to the Autorité des marchés financiers (hereinafter the "Authority");
  • modify the composition of, and the rules for appointing members to, the board of directors of the Organisme d'autoréglementation du courtage immobilier du Québec (hereinafter the "OACIQ"), and the term of office of the members of the discipline committee.

Real Estate Brokerage Contract

Bill 141 introduces a new Section 1 of the Act by providing a definition of a real estate brokerage contract. The definition stipulates that a real estate brokerage contract means a contract by which a party, the client, for the purpose of entering into an agreement for the sale, purchase or lease of an immovable, mandates the other party to act as its intermediary in dealing with persons who might be interested in purchasing or leasing the immovable, or who are offering an immovable for sale or lease, as the case may be, and, possibly, in bringing about an agreement between the client and a buyer, promisor-buyer, seller, promisor-seller, promisor-lessee, or promisor-lessor, as the case may be. The Bill specifies that a contract by which the intermediary obligates himself or herself without remuneration is not a real estate brokerage contract under this Act. For the purposes of Section 1, the following are considered to be immovables: (a) a promise of sale of an immovable; (b) an enterprise, if the enterprise's property, according to its market value, consists mainly of immovable property; and, (c) a mobile home placed on a chassis, with or without a permanent foundation, and an exchange is considered to be a sale.

In Section 2 of the Act, the Bill provides that to be an intermediary to a real estate brokerage contract for the sale or purchase of an immovable, with the exception of a mobile home placed on a chassis, with or without a permanent foundation, and except the persons referred to in the new Section 3, a person must hold a broker's or agency licence or a special authorization from the OACIQ.

Consequently, the intermediary party to a real estate brokerage contract for such a mobile home or for the lease of any immovable is not required to hold a broker's or agency licence. Such a licence may nevertheless be issued if the intermediary applies for it.

This is a significant amendment because a brokerage transaction relating to the lease of immovable property no longer requires the intermediary to hold a broker's or agency licence.

In light of the amendments regarding leasing brokerage and mortgage brokerage, the Bill provides a shortened list of persons who are not required to hold a licence when they are parties, as intermediaries, to a real estate brokerage contract (new Section 3).

The Bill also adds, by Section 3.1, that determining whether an action is a brokerage transaction or not is a question of fact.

Mortgage Brokerage is No Longer Covered under the Act

With the Bill, the Act will only cover real estate broker's and agency licences, and no longer covers the mortgage broker and mortgage agency. This aligns with the fact that one of the main objectives of the Bill is to transfer supervision and control of mortgage brokerage to the Authority.

To ensure a smooth transition, the Act will continue to apply to brokerage transactions relating to loans secured by immovable hypothec until the date of coming into force of the relevant amending provisions to the Act respecting the distribution of financial products and services. The Bill also provides other special transitional provisions to ensure that licences issued under the Act are recognized by the Authority under the Act respecting the distribution of financial products and services, therefore authorizing licence holders to carry on activities in the mortgage brokerage sector. Note that the Bill states that lawyers, notaries, trustees, members in good standing of the Ordre professionnel des comptables professionnels agréés du Québec, and persons employed by a hypothecary or mortgage creditor (provided the brokerage transaction is carried out solely on behalf of that creditor) are not mortgage brokers, if, in the exercise of their functions, they engage in mortgage brokerage transactions (new Section 11.2 of the Act respecting the distribution of financial products and services).

In addition, the OACIQ must cooperate with the Authority on any transitional measure concerning their respective missions relating to mortgage brokerage.

Other amendments

The Act is subject to other amendments, including the repeal of the obligation under the current regime for a broker, when new to the occupation, to carry on brokerage activities for an agency for the period set out in the OACIQ's regulations before the broker may work for the broker's own account or become an executive officer of an agency.

The Bill also provides for the addition of Section 20.1, which stipulates that only a broker's licence holder who has carried on brokerage activities during the period set out in the OACIQ's regulations may be an executive officer of an agency licence holder.

Finally, real estate brokerage contracts concerning any of the immovables mentioned under Section 23 (chiefly residential immovables comprising less than five dwellings or subject to an agreement or declaration of co-ownership) must be evidenced in writing on the mandatory form prepared by the OACIQ (new Section 24), and it is no longer possible for a client to sign a waiver of the right to terminate the contract (Section 28).

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