The big deal: starting today, the same broker will no longer be able to work for both the seller and the buyer in the same residential real estate transaction.
Contrary to what you might think, the news is not that dual representation is now prohibited. What is surprising here is that it was still possible yesterday.
Even more surprisingly, there were clients for whom these conflict of interest situations did not seem to pose a problem, despite the financial stakes associated with buying a home.
This ban was announced in December by the CAQ government, and it is today that it comes into force.
At the time of the adoption of the law providing for these changes, Quebec claimed to act in order “to protect buyers in a context of overheating of the real estate market”.
Allow me a comment here. By targeting this aberration, Quebec found a cost-effective way to show it cared about the problem. To solve it, it would also have been necessary to regulate certain tactics that allow brokers to fuel overbidding, i.e. everything that contributes to feeding frenzy, the feeling of urgency and blindness. I am thinking in particular of the restricted visit periods and the too short deadlines for submitting offers to purchase, not to mention the multiple secret offers.
But hey, it's still progress. So what exactly is it about?
New contract needed
The same real estate broker can no longer represent both the seller and the buyer. It makes sense. These professionals are required to look after the interests of their clients, and the new law recognizes that these intermediaries are not contortionists. I don't know how you can pull off the best deal for two opposing parties at the same time. It's as mysterious as a black hole.
How is it going to happen, concretely? An intermediary must terminate the brokerage contract with his buying client as soon as the latter wants to submit a promise to purchase for the property of another of his selling clients.
The "purchase" contract must be terminated before the buyer writes his offer. This “purchase” contract is also part of the new obligations provided for in the law.
If you entrust a broker with the mandate to find you a home to acquire, you will have to formalize everything by contract. In other words, verbal agreements are no longer recognized. It will not prevent a buyer from interacting with a broker if they are not bound by a formal arrangement, but the role of the intermediary will be limited to providing the information necessary for the transaction, without being able to involve in negotiations and paperwork.
Without a signed agreement, a buyer must understand that the broker they are dealing with will not be of much help.
From now on.