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8. Declarations and obligations of the seller

When acting as intermediary in a real estate transaction, the broker must obtain from the seller a series of declarations and undertakings set out in the brokerage forms for the sale of residential immovables.

In these forms, the seller makes declarations regarding his status as owner, the existence of other brokerage contracts or third-party rights, and his status as a Canadian resident. Then he will be required to answer, to the best of his knowledge, the questions contained in the form Declarations by the seller of the immovable (DS), which forms an integral part of the brokerage contract and must be attached thereto.

By signing the brokerage contract, the seller commits to a number of elements that must be clearly defined and agreed upon with the broker, mainly the things that the seller may not do during the term of the contract and the documents and information that the seller must provide. These elements are discussed in section 8 of the brokerage contracts to sell.



The seller declares to be the sole owner

In clause 8.1.1, the seller declares that he is the sole owner of the immovable or duly authorized to sign the brokerage contract.

This declaration is intended to establish the seller’s capacity to sign the brokerage contract and eventually sell the property. This does not relieve the broker of his obligation to make the usual verifications to ensure that the person signing the contract has the legal capacity to do so, i.e. that he is the owner of the immovable or authorized to sign the contract. These verifications are made by consulting the deed of acquisition or by obtaining a copy of the mandate, power of attorney or resolution authorizing him to do so.

For more information: Professional Practices Guide – The real estate broker’s practice and the law: Natural persons

 

Existence of another brokerage contract or of a pre-emptive right in favour of a third party

In clause 8.1.2. of the exclusive contract, the seller then declares that the immovable is not the subject of a brokerage contract with another broker or agency nor the subject of an agreement to sell or exchange it, and in clause 8.1.3 (8.1.2 of the NEBCS), that the immovable is not the subject of an agreement to lease it under conditions that would result in preventing the sale from taking place.

The declaration in clause 8.1.4 (8.1.3 of the NEBCS) allows the broker to verify with the seller, before signing the contract, whether or not a right of first refusal or of preference has been granted to another person.

 

Canadian residency

In clause 8.1.5 (8.1.4 of the NEBCS) the seller declares that he is a Canadian resident within the meaning of the Income Tax Act and the Taxation Act and does not intend to change this residence, otherwise the tax provisions concerning the issuance of a certificate of compliance or the withholding of a portion of the sale price shall be applied.

If the seller is a non-resident, he must provide a guarantee that he will pay certain taxes imposed by the tax authorities. The statement “otherwise the tax provisions concerning the issuance of a certificate of compliance or the withholding of a portion of the sale price shall be applied” is intended to cover any tax liabilities. The certificate referred to is the clearance certificate that the tax authorities can issue. The signing of the deed of sale, in the case of an eventual transaction, could be conditional upon the receipt of such a certificate, which may take a few months to obtain. The broker must take this into account, just as in a transaction with a withholding of funds by the notary, which can represent a large percentage of the proceeds of the sale. There may be times when there are insufficient funds available for the broker to be paid from the proceeds of the sale.

In some cases, the buyer may have to assume these tax liabilities if they are not assumed by the seller.

If the seller is not a Canadian resident within the meaning of provincial and income tax laws, the statement must be crossed out and initialed by the broker and the seller. A good practice would be to enter this information in clause 11.1 Other declarations and conditions or, if more space is needed, in the OACIQ recommended form Appendix G – General. The broker should refer the client to legal counsel.

 

Non-resident of Canada

A person is considered a non-resident of Canada for tax purposes if he or she:

  • normally, customarily, or routinely lives in another country and is not considered a resident of Canada;
  • does not have residential ties in Canada:
    • no domicile;
    • no spouse or dependants;
    • no personal property;
    • no social ties.

A person is also considered to be a non-resident of Canada for tax purposes if he or she:

  • lives outside of Canada throughout the tax year;
  • stays in Canada for less than 183 days in the fiscal year.

 

Seller's undertakings

If the brokerage contract is exclusive, the seller undertakes during the term of the contract, not to, directly or indirectly:

  1. offer the immovable for sale through a person other than the agency or broker;
  2. become party to an agreement for the sale or exchange of the immovable other than through the agency or the broker;
  3. become party to an agreement to lease the immovable under conditions that would result in preventing the sale from taking place.

This threefold commitment by the seller not to offer the immovable for sale or to be a party to a transaction other than through his broker is fundamental and supports the principle of the exclusivity of the contract awarded to the agency.

The scope of the seller’s undertakings can be limited or adapted (e.g. in the case of a family member, neighbour or any other person with whom he may have had exchanges on this subject and whom he wishes to exclude from the contract). Where applicable, this restriction must be specified in clause 11 of the form, or in an annex to the contract, making sure to identify the excluded persons and providing for a time frame within which this sale must take place. This time frame can be a few days, a few weeks or even the entire term of the contract. It is also possible, without excluding these persons from the scope of the brokerage contract, to agree with the seller that no remuneration will be payable if the property is purchased by the persons indicated in clause 11, or that the remuneration will be reduced in a certain proportion or that the seller will pay compensation if necessary. The broker may use standard clause 1.7 to exclude the persons specified from the brokerage contract for a determined period.

For more information: Standard clauses - 1 - Brokerage contract : 1.7 - Designated persons excluded from the brokerage contract for a determined period


Authorization of sale by the seller

Some owners wishing to sign a brokerage contract ask to also be able to market their immovable themselves in order find prospective buyers. We are not talking here about a seller who interacts with the buyer himself, but about a seller who can market his property. Complication risks arising from a mismanagement of this potential double marketing are significant. Hence, it is necessary to be very cautious before consenting to such a request from the seller. The aim of the OACIQ is certainly not to encourage this practice.

It is important to note that the real estate broker must always fulfill his ethical obligations toward the parties to the transaction. Remember that a brokerage contract to sell can be amended to authorize the client to offer his immovable for sale by himself without affecting the exclusive nature of the contract. Indeed, a decision rendered by the Court of Appeal stated that the exclusivity of a brokerage contract concerns only brokers and agencies. This means that it is possible to cross out the statement stipulating that the seller agrees not to offer the immovable for sale by himself, while preserving the exclusive nature of the brokerage contract.

The authorization allowing the owner to offer his immovable for sale must be well regulated to avoid any sources of conflicts regarding whether it is the broker or the seller who found the buyer, the right to claim remuneration or not, and the advertised selling price. It is essential that this authorization be defined in the brokerage contract by using the following statements under clause 11.1:

The BROKER authorizes the owner to offer his IMMOVABLE for sale. Should the latter himself find a buyer, the remuneration indicated in clause 7.1 of the brokerage contract will be reduced to ______% of the sale price or $_______.

Notwithstanding the foregoing, there will be no decrease of remuneration should:

A. one or many promises to purchase be presented through real estate brokers, including the broker(s) identified in the brokerage contract, concurrently with a promise to purchase submitted directly by a buyer; or

B. should the buyer choose to be represented by his own real estate broker.

In this case, the owner will pay the remuneration specified in clause 7.1 of the brokerage contract.

The owner-seller agrees to notify immediately the agency or broker identified in the brokerage contract before accepting or refusing any promise to purchase submitted directly by a buyer. If applicable, the broker will complete the required mandatory forms.

The owner-seller agrees not to advertise any condition other than those contained in the brokerage contract, including the price, in any representations or advertisement he may make.

These clauses meet the requirements of Section 30 of the Real Estate Brokerage Act,1 which prohibits any broker from making the seller waive the rights indicated in the mandatory brokerage contracts and the regulation prohibiting brokers from amending such brokerage contracts to reduce the broker’s obligations or increase those of the client.2

 

1 “The client may not, by special agreement, waive the rights conferred by this chapter.”
2 S. 22 of the Regulation respecting contracts and forms


Contractual obligations

The agency or broker authorizing the seller to offer the immovable for sale by himself may waive in whole or in part the remuneration to which he is entitled. However, he cannot waive the remuneration in the case where this would create a disadvantage for a buyer of another broker.

In addition, all the obligations of the agency or broker as described in the brokerage contract remain, including the obligation of presenting to the seller, as soon as possible, any proposals for the purchase, lease or exchange of the immovable.

To do this, a statement that the owner agrees to notify the agency or broker immediately upon becoming aware of the existence of a promise to purchase coming directly from his buyer, shall be included in the brokerage contract. This will allow the seller’s broker to assume his advisory role properly, protect the interests of his selling client adequately, and be fair to all prospective buyers.

Representation of the buyer

The broker representing the buyer, with or without a brokerage contract to purchase, must pay particular attention in this context. Remember that all brokers are required to collaborate with each other, and the buyer’s broker cannot contact the seller directly because of the duty to collaborate.

Advertizing

To offer his immovable for sale, the owner may himself advertise it by any means he deems useful. However, a restriction shall be specified in the brokerage contract prohibiting him from promoting his immovable according to terms and conditions that are different from the ones stipulated in his brokerage contract, particularly in regard to the price, in order to be fair to all buyers. If he fails to accept this restriction, the broker or agency shall abstain from signing a brokerage contract.

The detailed description sheet (the one available only to brokers) must also state that the owner is authorized to offer his immovable for sale by himself.

Moreover, to avoid buyers’ confusion and any potential collaboration problems between brokers, the best practice is certainly not to allow the installation of two signs, namely the seller’s sign and the broker’s. Although this is not illegal, this situation should be avoided.

Information and keeping of transactional documents

As for all transactions, the agency or broker shall, even though it is the seller himself who found the buyer, send his notice of sale to the information listing service as described in the brokerage contract, if applicable, and keep all the relevant documents of the transaction on his records and make entries in his registers.

Deposit and collection of remuneration

Whether the buyer contacts the seller directly or does so through a broker, if he gives a deposit following the recommendations made by the seller’s broker, this amount shall be deposited in the trust account of his agency to protect the parties. Furthermore, the agency or broker may receive remuneration only in accordance with clause 7.1 of the brokerage contract or the agreement concluded with the client.

 

Documents to be provided by the seller

The documents listed in clause 8.3 (8.4 of the NEBCS), if he has them in his possession, must be provided by the seller as soon as possible. These documents are necessary for the broker to have the most complete information possible on the property, to proceed with the usual verifications and, if necessary, to recommend that the seller consult a legal advisor or other professional in order to correct any problematic situation that might be identified. If the seller does not have these documents in his possession, he must take steps to obtain them.

However, there is no need to delay the signing of the contract if certain documents are missing. The seller can provide them as soon as possible after signing the contract, which does not exempt the broker from making the usual verifications by consulting, for example, the Québec Land Register to obtain the deed of acquisition, or the Registraire des entreprises du Québec to verify the existence of the enterprise and the identity of its officers.

 

Loans and deeds of loan and hypothecary rights

Under clause 8.4 (8.5 of the NEBCS), the seller agrees to supply to the broker, as soon as possible, all loan documents pertaining to the immovable and the deeds of loan and hypothecary rights, including any penalty related thereto.

In addition to the information on existing loans mentioned in clause 4.3 of the brokerage contract to sell, the broker must ask the seller to undertake to provide the documents. This commitment is not limited to providing the documents in his possession. If these documents, including the deeds of loan and the documentation on penalties that may be associated with them, are not in his possession, he must take the necessary steps to obtain them and provide them as soon as possible.

Given the wide variety and complexity of mortgages, and in order to avoid surprises, particularly at the very end of a transaction, it is prudent to make such inquiries. To assist in this process, the recommended form Request for information relating to a hypothecary loan (PDF) can be used to send an inquiry to the financial institution where the mortgage was taken out. The seller requests and authorizes the institution to provide the broker with a range of information about the mortgage he has taken out with the institution. This information confirms the original amount of the loan, first and last payment dates, balance, instalments, interest rate, maturity, amortization and term of the loan. The institution will also be able to confirm the terms of early repayment of the loan as well as penalties and other conditions, such as whether certain promotional benefits must be repaid. The broker will also obtain confirmation regarding whether the loan can be assumed and under what conditions. While the seller is required to provide the information, the broker is still responsible for making the appropriate verifications.

 

Certificate of location

In clause 8.5 of the brokerage to sell (8.6 of the NEBCS), the seller undertakes to supply to the agency or the broker, as soon as possible, a certificate of location of the immovable:

  • reflecting any operation, amendment or cadastral renovation;
  • reflecting the current physical state of premises (e.g. heat pump, terrace, fence, shed, swimming pool), restrictions of private law (e.g. servitude, real rights or other charges), and restrictions of public law (e.g. municipal by-laws).

The seller’s commitment is clear. He must provide his broker with a certificate of location as soon as possible, even if he does not have it in his possession. Such a certificate must describe the current state of the property, i.e. reflecting any cadastral renovation, even if this only involves a lot number change, a subdivision, a parcelling out or any other modification, whether to the zoning or to the use of the lot (e.g.: addition of a shed, pool or spa).

It is essential that the broker obtain a copy and review it before signing the brokerage contract, in order to gather and verify the information he will need to properly describe the immovable in the brokerage contract and to be able to detect, right then and there and within the limits of his competence, any elements indicating that the certificate of location does not describe the current condition of the immovable. If this is the case, the broker must ask the seller to have a new one drawn up as soon as possible.

The certificate of location allows the broker, among other things, to determine if there is an illegal view, an encroachment or a servitude. If the certificate of location reveals the existence of an illegal view and no servitude has been granted, it is important that the broker bring this fact to the attention of the seller, emphasizing the need to indicate it in the form Declarations by the seller of the immovable and to correct this irregularity. If it has not been corrected by the time a promise to purchase is presented, a statement to this effect will have to be included, bearing in mind that this may hinder the completion of the transaction.

If no certificate of location exists at the time the brokerage contract is taken up, the broker must advise his client to obtain one as soon as possible. This certificate could reveal the existence of problems that might not be resolved in time if they were known only after a promise to purchase was received. It is important to remember that the seller undertakes, in clause 10.3 of the Promise to purchase form, to provide the buyer with a valid title of ownership, just as he does in clauses 8.3 and 8.5 of the brokerage contract to sell (8.4 and 8.6 of the NEBCS). It might be risky to let a client make such a declaration in the absence of a certificate of location.

For more information: Importance of an up-to-date certificate of location, Certificate of location dating back more than ten years: What you should know and Professional Practices Guide – The real estate broker’s practice and the law: Certificate of location

 

Family residence, marital status and spousal consent

If a portion of the immovable constitutes the seller’s family residence, or if required by his marital status, the seller must give his broker either a document evidencing the consent of his married or civil union spouse, as well as the spouse’s undertaking to intervene in the notarial deed of sale for the same purposes, or a copy of the judgment authorizing him to sell the immovable without the consent and concurrence of his married or civil union spouse. This is provided for in clause 8.6 of the exclusive brokerage contract to sell (8.7 of the NEBCS)

The concept of family residence, marital regimes and spousal concurrence can be important issues in a residential real estate transaction, and you must absolutely take them into consideration, hence the need for an undertaking from the seller in this regard. Clause 8.6 (8.7 of the NEBCS) specifically addresses the documentation required to obtain the consent of the seller’s spouse, in cases where a portion of the immovable constitutes the seller’s family residence or if the seller’s marital status requires it.

Thus, the broker must necessarily have the spouse’s written consent if the latter has filed a declaration of family residence. It is possible to verify this filing in the Québec Land Register or in a Bureau de la publicité des droits, often located in the local courthouse. Consent is also required when the seller is married under the community of property regime.

If the spouse is present at the time of signing the brokerage contract, consent can be expressed by signing the contract in section 15 under “Intervention of the [...] seller’s spouse.” If the spouse is not present, the seller must provide the broker with a document attesting to the spouse’s consent and, if applicable, the spouse’s concurrence, as well as the spouse’s undertaking to intervene in the notarial deed of sale.

The seller could also provide, in special circumstances, a copy of a judgment authorizing the seller to sell the immovable without spousal consent or concurrence, or a copy of a document evidencing the spouse’s consent to the sale because the spouse cannot be present.

For more information: Professional Practices Guide – The real estate broker’s practice and the law: Persons who are married or in a civil union

 

Change in financial or other situation

In clause 8.7 (8.8 of the NEBCS), the seller undertakes to keep the agency or the broker informed of any change in his financial situation or any situation that could compromise the performance of the contract, including concerning his marital status.

A brokerage contract is usually signed for a term of a few months, or at least a few weeks. During this period, the seller’s financial or personal situation may change (e.g.: separation, notice of exercise of a hypothecary right by the bank, bankruptcy, notice of expropriation, health problems, etc.). Such situations, even less serious ones, can compromise the broker’s work and the performance of the contract, hence the requirement for the seller to inform the broker of any changes.

 

Showing and advertising the immovable

In clause 8.8 (8.9 of the NEBCS), the seller gives the agency or the broker the exclusive right:

  1. to show the immovable at any reasonable time, with any appointment being arranged directly with the occupant of the premises. The agency or the broker may allow other agencies or brokers to exercise this right in whole or in part;
  2. subject to the restrictions set out in clause 11.1 or any annex forming part of this contract, and subject to any regulations, to use any advertising and any signage he considers appropriate. The agency or the broker may allow other agencies or brokers to exercise that right in whole or in part.

When it comes to showing and advertising the immovable, the seller’s undertaking takes a slightly different form since, if he has entered into an exclusive brokerage contract to sell, he grants an exclusive right to his broker. This exclusivity is consistent with the exclusive nature of the contract, as specified in section 2. This exclusive right is made flexible to allow other brokers or agencies to show or advertise the property.

In the case of visits, the contract specifies that they must take place at any reasonable time. The broker and the seller need to discuss and agree on this. It goes without saying that some flexibility is needed, and that it is in the seller’s interest to allow such visits to take place within a short period of time. However, the situation must be taken into account. For example if the seller is elderly or if his schedule is restrictive, the seller may wish to limit showings to certain periods. If the immovable is leased, a certain amount of time will be required in order to take into account the provisions of the Civil Code of Québec regarding leases of dwellings.

Clause 8.8 (8.9 of the NEBCS) specifies that appointments must be arranged directly with the occupant of the premises, i.e. the owner or lessee. The broker must establish right from the start the way in which appointments will be made and how visits will take place, and enter any special conditions regarding appointments and visits in section 11. Other declarations and conditions, or in an annex to the contract.

Last updated on: May 18, 2023
Reference number: 264962