Exclusive or non-exclusive brokerage contract: how to choose?

Are you planning to buy or sell a property? If you are working with a real estate agent, you will need to sign a brokerage contract to formalize your relationship. The contract can be exclusive or non-exclusive.

What is the difference between those two types of contracts? Here is all you need to know.

What is the OACIQ brokerage contract?

When you use the services of a real estate broker to buy or sell a house or condominium in Quebec, you need to sign a brokerage contract with the broker. This gives the broker the right to act as an intermediary to assist you in your real estate project.

The brokerage contract is mandatory to use the services of a real estate broker in the province. It must be completed by your broker, with your participation. The real estate agent cannot modify it in any way that would reduce his obligations to you or increase yours.

There are several forms of brokerage contracts to suit all types of transactions and different needs. Developed by the Organisme d'autoréglementation du courtage immobilier du Québec (OACIQ) and approved by the Ministère des Finances, they are designed to ensure best professional practices and to protect your interests.

What information is contained in this document?

All brokerage contracts, whether for the purchase, sale or rental of a residential property, must contain certain essential information, including:

• Identification and contact information of the parties;
• The purpose and duration of the agreement;
• Identification of the property or characteristics of the property sought;
• Price and conditions (exclusions, dates, etc.);
• Whether the property is subject to GST and QST;
• The rights and obligations of the parties;
• The obligations of the broker or the agency;
• The method and terms of compensation;
• The exclusivity of the contract and its irrevocability, if any;
• The possibility for the parties to have recourse, if necessary, to conciliation, mediation or arbitration offered by the OACIQ in accordance with the Real Estate Brokerage Act;
• All information related to the property and relevant to the transaction;
• A 3-day right of withdrawal.

Confused by a clause? Not sure you understand certain terms in your contract? The real estate broker must provide you with all the explanations you need to understand. So don't hesitate to ask for clarification before you commit.

Different forms for different types of real estate

The OACIQ has developed a variety of forms to help you with your real estate project, whatever it may be. Among them, there are different brokerage contracts adapted to the specificities of each type of real estate. There is a special contract for:

• Residential immovables with less than 5 dwellings (exclusive or non-exclusive);
• Divided co-ownership (exclusive only);
• Undivided co-ownership (exclusive only);
• Mobile home on leased land (exclusive only). 

Each of these contracts is tailored to the specific characteristics of the property.

Exclusive vs. non-exclusive brokerage contracts: what is the difference?

When it comes to selling your home (or any other immovable with less than five dwellings), your real estate agent will introduce you to the two types of contracts available to you: exclusive and non-exclusive. 

The exclusive contract gives your broker the right to act as your exclusive agent during the sales process. This makes him the only person who can sell your property. No other real estate agent can solicit you directly.

The non-exclusive contract, on the other hand, gives you the option of using another agent or finding a buyer on your own. However, you must notify your broker if you sign another agreement, and you must offer your property for sale under the same conditions and at the same price.

So which type of contract should you choose? The decision is up to you, depending on your preferences and situation. Keep in mind, however, that an exclusive contract can be more motivating for the real estate broker you hire since he is guaranteed a commission if he succeeds in selling your home. 

The Brokerage contract - Sale

The brokerage contract is an essential document for selling your property with a real estate broker in Quebec to ensure that your transaction complies with the Real Estate Brokerage Act. If you choose to work with this professional, you will need to use one of the following forms:

• Exclusive brokerage contract – Sale – Chiefly residential immovable containing less than 5 dwellings excluding co-ownership; 
• Non-exclusive brokerage contract – Sale – Chiefly residential immovable containing less than 5 dwellings excluding co-ownership; 
• Exclusive brokerage contract – Divided co-ownership – Fraction of a chiefly residential immovable held in divided co-ownership; 
• Exclusive brokerage contract – Undivided co-ownership – Share of a chiefly residential immovable held in undivided co-ownership; 
• Exclusive brokerage contract – Sale – Mobile home situated on leased land.

Whichever form you sign, your agent must explain its contents to you and make sure you understand all the details.  

If you choose an exclusive contract, the brokerage fee is paid when you accept an offer to purchase and all of the purchase conditions are met, except for the signing of the deed.

In the case of a non-exclusive contract, the broker will be compensated if the property is sold during the term of the contract and if the broker is the efficient cause of the sale. He will be considered as such if the buyer has purchased a property in which he has shown interest during the term of the contract with the broker.

Can I sell my property on my own even though I have an exclusive contract?

Yes, you may be able to sell your property on your own despite signing an exclusive agreement. The brokerage contract can be amended to allow the owner to do so without affecting the exclusive nature of the brokerage.

However, this authorization remains at the discretion of the broker and must be included in clause 11.1 of the contract.

The Brokerage Contract - Purchase

Are you a buyer interested in buying your property through a real estate agent? Then you will need to use the Exclusive Brokerage Contract - Purchase form, which, as its name suggests, is necessarily exclusive. 

This form must be used regardless of the type of property you are looking for. It contains clauses relating to:

• The characteristics of the property you are looking for;
• The desired purchase price and conditions;
• The respective obligations of the buyer and the broker;
• The broker's fee;
• The follow-up to be done.

The contract clearly states the basis of your agreement. It also authorizes the agent to canvass and solicit properties that are not on the market.

In addition, if the seller of the house you are interested in is not represented by an agent, yours will perform all the usual due diligence.

Is the brokerage contract mandatory for a purchase?

Yes, the brokerage contract is a mandatory form to be represented by a real estate agent when buying a property. Without this form, the professional cannot promote your interests, as brokers are prohibited from representing clients who have not signed a brokerage contract.

If you don't sign a brokerage contract, the seller's real estate agent cannot represent your interests because he is already representing those of his client, the seller. However, he must fulfill his duty of disclosure and ensure that you are treated fairly by objectively informing you of all relevant information regarding the transaction.

Start and end of the contract with your broker

Regardless of the form used, the brokerage contract becomes effective when the parties sign it. The real estate agent will then give you a duplicate of the contract. This duplicate is not a simple photocopy, but a form that you must also sign.

Was the form signed electronically? The version you receive is the original contract. As with the paper version, you should keep your copy in a safe place. 

The brokerage contract expires 30 days after you sign it unless otherwise agreed with your agent. When the contract expires, you may choose to:

• Renew your contract;
• Sign a new contract with another broker;
• Not to renew your contract.

If you choose to renew your contract, you must do so no later than the last day specified in the agreement. Otherwise, you will need to fill out a new form. 

Your right to terminate an exclusive brokerage contract

Whatever type of brokerage contract you sign, the law grants you 3 days from receipt of the signed duplicate of the contract to cancel it. This is known as the right of withdrawal. 

Once this period has expired, your ability to terminate the contract, whether exclusive or not, depends on its revocability. An irrevocable contract does not allow you to cancel the contract without mutual agreement with your broker. A revocable contract, on the other hand, can be terminated at any time. 

In general, it costs you nothing to exercise your right to cancel. There is however one exception. The broker can claim compensation if a sale is made within 180 days of the end of the contract if the buyer was interested in the property during the term of the exclusive contract. This does not apply if a new brokerage contract has been granted to another real estate agent in good faith.

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