Assent of Bill °141: Significant changes regarding brokerage
Bill n°141 (hereinafter, “Bill 141”)—an omnibus bill introduced by the Ministre des Finances du Québec on October 5, 2017—lays the groundwork for major changes to financial sector legislation and affects the entire the leasing brokerage market.
After numerous public consultations, Bill 141 was adopted and assented to on June 13, 2018. It makes substantial changes to more than 10 laws governing Quebec’s finance sector, including the Real Estate Brokerage Act (hereinafter, the “Brokerage Act” or the “Act”), particularly its scope. The provisions of the Brokerage Act amended by Bill 141 came into force July 13, 2018.
Bill 141 amends the Brokerage Act, in particular to:
- define real estate brokerage contracts
- modify the legal framework applied to a real estate brokerage contract for the lease of an immovable
- transfer the supervision and control of real estate brokerage to the Autorité des marchés financiers.
Definition of a real estate brokerage contract
Bill 141 introduces to the Brokerage Act a definition of a real estate brokerage contract, as “a contract by which a party, the client, for the purpose of entering into an agreement for the sale or lease of an immovable, asks the other party to act as its intermediary in dealing with persons who might be interested in purchasing or leasing the immovable and, possibly, in bringing about an agreement of wills between the client and a buyer, promisor-buyer or promisor-lessee.”
A related subsection is introduced regarding the purchase or lease of an immovable in “bringing about an agreement of wills between the client and a seller, promisor-seller or promisor-lessor.”
Bill 141 also adds subsection 1.1 to the Brokerage Act, which states that for the purposes of Section 1, the following are considered to be immovable:
- a promise of sale of an immovable
- an enterprise, if the enterprise’s property, according to its market value, consists mainly of immovable property
- a mobile home placed on a chassis, with or without a permanent foundation.
Furthermore, an exchange is considered to be a sale.
On the other hand, as stipulated under the previous version of the Brokerage Act, a contract by which an intermediary obligates himself or herself without remuneration is not a real estate brokerage contract under the Act.
Real estate brokerage contract for an immovable
Significant changes have also been made to the standards for determining whether a licence or special authorization from the l’Organisme d’autoréglementation du courtage immobilier du Québec (hereinafter, the “OACIQ”) is required.
According to the new Section 2 of the Brokerage Act, “No person, except the persons referred to in Section 3, may be the intermediary part to a real estate brokerage contract for the sale or purchase of an immovable” if they do not hold a broker’s or agency licence or a special authorization issued by the OACIQ, unless the immovable is a mobile home placed on a chassis, with or without a permanent foundation.
This amendment means that an intermediary to a real estate brokerage contract for the lease—and not the sale or purchase—of an immovable is not required to hold a licence or a special authorization from the OACIQ, which is clearly a major departure from the previous version of the Brokerage Act.
However, there are two important specifications:
- holders of a licence issued under the Brokerage Act must continue to meet their obligations under the Act when entering into a leasing transaction
- a person who does not hold a licence can enter into a leasing brokerage transaction, but cannot use a title that implies that he or she is a real estate broker; only those with a licence in accordance with the Brokerage Act can use the title of real estate broker or real estate agency.
The list of persons who, under the new Section 3, are not required to hold a licence to enter into a brokerage transaction, has also been shortened, considering that mortgage brokers are no longer subject to the Act, and that amendments were made to the legislation on real estate brokerage contracts for leasing transactions.
For example, the following persons are not required to hold a licence (unless they use a title that is restricted under the Act):
- advocates, notaries, liquidators, sequestrators, syndics or trustees, provided the contract is entered into in the exercise of their functions
- chartered administrators, provided the contract is entered into incidentally to the exercise of their real estate management functions and is not a real estate brokerage contract for the purchase, sale, lease or exchange of part or all of a chiefly residential immovable comprising fewer than five dwellings, or a fraction of a chiefly residential immovable that is subject to an agreement of indivision or divided co-ownership (condo).
Mortgage brokerage is no longer subject to the Act
The Brokerage Act introduces an important change to regulations on mortgage brokerage, in that the OACIQ will no longer regulate and monitor mortgage brokerage under the Act. Mortgages are now considered to be “financial products” and are therefore regulated by the Act respecting the distribution of financial products and services. The Autorité des marchés financiers will therefore take charge of training and oversee the mortgage broker profession, effective May 1, 2020.
These are the major changes that will be of particular interest to brokers and other people who lease out immovables, as well as to mortgage brokers.
Stagiaire en droit
Me René Gauthier