Bill 5 on Real Estate Brokerage: The End of Double Representation

Yes, you can still buy property without a real estate broker.

What is Bill 5? 

Bill 5, titled An Act to Give Effect to Fiscal Measures Announced in the Budget Speech Delivered on 25 March 2021 and to Certain Other Measures, responds to comments received during a public consultation, launched on June 10, 2021, on the practices of real estate brokers in the overheated market, as well as during special consultations held by the Committee on Public Finance.

Bill 5 was adopted on December 10, 2021, by the National Assembly. It aims at protecting buyers in transactions that involve real estate brokers, among other things. It includes two significant amendments to the Real Estate Brokerage Act, which has been administered since May 2010 by the OACIQ (Organisme d’autoréglementation du courtier immobilier du Québec). This law mandates the OACIQ to oversee real estate brokers with a view to protecting the public.

But rest assured, it is still be possible to buy and sell property broker-free.

Contents: 

• What amendments are made to the Real Estate Brokerage Act?
  • End of double representation by real estate brokes
  • End of verbal brokerage contrats
• What are the real implications of the new measures for those buying or selling without a broker?
  • Are you looking to make a broker-free purchase of a property that is sold broker-free? 
  • Are you looking to make a broker-free purchase of a property that is owned by a seller being represented by a real estate broker?
  • You’re selling broker-free, but a potential buyer wants to be accompanied by a broker?

What amendments are made to the Real Estate Brokerage Act?

Real estate brokers for residential buildings, along with the buyers and sellers of those building will be affected by the coming into force of Bill 5. Let’s take a closer look at what this means for them. 

End of double representation by real estate brokers

Double representation has the potential to create conflicts of interest, given that real estate brokers have a duty and a responsibility to act with transparency, to respect the confidentiality of their clients’ information and to defend the client’s interests.

Since June 10, 2022, brokers are prohibited from representing both a buyer and a seller, or a lessee and a lessor, in a single transaction involving a residential building. A single broker is no longer allowed to represent both parties in a transaction. Ending double representation is aimed at ensuring that buyers are treated more equitably in an overheated real estate market. 

In the event that a real estate broker is bound by a brokerage contract to sell a property, and one to buy with a person interested in buying the property under contract, then the broker must rescind one of the contracts.

Some exceptions, notably for underserved Quebec regions 

Some exceptions to the double representation measure have been announced by the OACIQ. For instance, in regions with a shortage of real estate brokers, these brokers are authorized to represent both the buyer and the seller for the same transaction.

In addition, these changes do not apply to residential buildings with 5 or more dwellings. 

End of verbal brokerage contracts 

The bill also calls for the end of verbal contracts between brokers and clients. Therefore, a real estate broker can no longer be paid for residential brokerage services without a written brokerage contract for the purchase, sale, rental or exchange of a building.

The buyer can still do business with a real estate broker without signing a brokerage buying contract (BBC), but the broker is not allowed to represent that person.

However, the broker must:

• Offer that person fair and objective treatment.
• Allow them to visit the property.
• Provide them with all the information relating to the property and the transaction.
• Advise them of the rights and responsibilities of all parties relating to that transaction regardless of whether or not they are represented by a broker.

The real estate broker can help a buyer fill out the forms relating to an offer to purchase but can neither make recommendations about the amount to offer nor negotiate on their behalf.

What are the real implications of the measures for those buying or selling without a broker? 

It would be wrong to think that the changes to the Real Estate Brokerage Act mean that it’s now necessary to sign a brokerage contract in order to carry out a transaction to sell or buy property. That’s not at all the case! Representation from a broker continues to be a personal choice, not an obligation

Are you looking to make a broker-free purchase of a property that is sold broker-free? 

In this situation, the buyer will be in direct contact with the seller and the transaction can be carried out at the pace both feel comfortable with. The relationship is simpler, more informal and the parties can quickly:

Are you looking to make a broker-free purchase of a property that is owned by a seller being represented by a real estate broker? 

Buying a property without an intermediary has several advantages, including potentially not having to pay the commission. Unless they sign a “purchase” brokerage contract, buyers do not have to pay a representation fee to an agent.

Buyers can purchase a house listed by a real estate agent even if they do not sign a “purchase” brokerage contract with an agent. The code of ethics that binds the listing agent (representing the seller) states that the agent must:

You’re selling broker-free, but a potential buyer wants to be accompanied by a broker?

Bill 5 does not prevent you from doing business with a buyer represented by a broker. Remember: if the buyer is represented by a broker, the brokerage contract is only between those two parties. Buyers can still deal with you, be it directly or through their broker.

And henceforth, since this broker is legally bound to the buyer, they cannot attempt to solicit the contract to sell your property if their client wants to make an offer on your property. That would be a breach of the new measures in the Real Estate Brokerage Act, and you would be within your rights to file a complaint with the OACIQ.