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5 facts you should know about protection

Many homeowners mistakenly believe that doing business with a real estate broker will protect them from any number of situations. But in fact, all real estate transactions get exactly the same legal protection.

There is a lot of confusion about this among consumers. However, selling with a broker does not protect you in case of hidden defects or if a buyer backs out. It also does not replace a professional property inspection and does not exempt you from needing a notary to conclude the transaction. 

You get the same avenues of recourse in the event of a nasty surprise, regardless of whether or not you’re selling with a broker.

1. Hidden defects

If a hidden defect is revealed after the transaction, the seller could be sued by the buyer and could potentially be held responsible for the problem. A real estate broker can’t do anything for the seller, who will have to get a lawyer for his or her defense.

“In fact, it’s up to the owner to ensure that the home is free of defects at the time of sale,” explains Maria Elena Bejan, a notary at DuProprio. “The owner must disclose to the buyer any defects or problems the property could potentially have. This is done for instance by filling out a Declaration of the Seller to the best of the owner’s knowledge. Any owner who does not do this could be sued.”

As Diane Leblanc, a real estate coach at DuProprio, puts it, “Transparency in real estate will ensure you sleep well at night.”

2. Buyer backing out

Sadly, a buyer can breach his or her obligations and back out of a sale, either when it comes time to fulfil the conditions in the offer to purchase or even once the property is considered sold and you’re waiting to go see the notary.

In this situation, whether or not the homeowner is represented by a broker, the legal recourse will be the same. The owner can choose to take legal action against the buyer who withdrew or simply find a new buyer. 

3. Property inspection

While the seller must guarantee that the home is free of hidden defects, the buyer must demonstrate caution. During the purchase, the buyer must take reasonable measures to ensure the property’s quality.

The involvement of a broker in the transaction does not guarantee the quality of the immovable good. Nor does it replace getting a professional to inspect the property.

4. Finalizing the transaction

“During a property sale in Quebec, the owner and the buyer are obligated to conclude the transaction in the presence of a notary,” clarifies Maria Elena Bejan, a notary at DuProprio. “It’s the notary who reviews the titles and closes the deal, not the real estate broker.” 

5. The Real Estate Brokerage Act

What is causing confusion among consumers is that the Real Estate Brokerage Act is currently being advertised and promoted by the brokerage industry, but is never explained. So, consumers don’t know what protections they receive through the Act.

Selling with a real estate broker protects you only from damage that would result from fraud or a professional error committed by the broker him- or herself. And you would be covered only if the real estate indemnity fund (FICI) or the professional liability insurance for Quebec real estate and mortgage brokers and agencies (FARCIQ) decides the claim is admissible.

So, you’re only protected from the broker’s actions.

This protection isn’t necessary when you’re selling with DuProprio’s services, since no broker is involved in the transaction.