The Buyer’s Contract to Purchase is a legal contract that allows a real estate broker to represent a buyer in a residential real estate transaction.
Until recently, a verbal agreement between broker and buyer was all that was needed for a broker to represent a buyer, although brokers could – and did – use signed contracts in certain situations. In June 2022, a change to the Quebec Real Estate Brokerage Act made it mandatory for a broker to have a signed Brokerage Contract in order to represent a buyer. Along with changes to rules regarding double-ending, the updates to the Act are intended to clarify brokers’ obligations and responsibilities toward their clients, thereby assuring a worry-free transaction (We discussed these changes to the Act in a previous blog post).
The Brokerage Contract to Purchase clearly identifies what the clients are looking to purchase. It also clearly identifies the broker’s obligations to the buyer, including:
- the broker is required to promote your interests and protect your rights
- the contract clearly spells out your rights and the terms of your relationship with the broker
- clearly-defined client objectives
- access to for-sale-by-owner properties
- advice on offer price + offer submission
- negotiation on your behalf
- assurance that the broker is representing your needs
- the OACIQ is very strict when it comes to enforcing the Real Estate Act so you can have more confidence in your broker and your transaction
By signing a Brokerage Contract, buyers are giving the broker the exclusive contract to represent them in the home-buying process in the area and to uphold the stipulations specified in the contract. Buyers can visit open houses without their broker, but they must let the listing broker know they have a signed contract.
The Brokerage Contract to Purchase codifies some of the best practices brokers were applying in their practices – representing their clients’ best interests and clearly spelling out their obligations to their clients. Clarifying expectations and obligations helps build stronger relationships and helps ensure better outcomes for everyone.
In our experience, there is a clause in the contract that prospective buyers tend to be uncomfortable with, and that is the remuneration clause. Clause 6 outlines the terms of the broker’s compensation. With verbal contracts, it was understood that the buyer’s broker would get a portion of the commissions paid by the seller, but there wasn’t usually much discussion about just how much those commissions were. With the written Buyer’s Contract, the broker’s commission is clearly indicated – ahead of any offer to purchase being made. The commissions payable still come from the seller in most cases. However, if that commission is lower than the commission indicated in the contract, the buyer could be responsible for paying the difference. At Team Ellerbeck, we’ve solved this issue by adding a clause in Section 10 of the contract stating the compensation in 6.1 only applies to homes not sold on MLS and, additionally, the broker agrees to accept the compensation offered on the MLS listing, thus ensuring no surprise compensation costs.
It’s still possible to use a broker to buy a home without signing a contract BUT you lose your legal protections. Should you choose not to be represented by a broker, you can sign a waiver to that effect. But since the point of the BCP is to provide you with a worry-free transaction, waiving this right might not be in your best interest.
If you have questions about how the Brokerage Contract to Purchase will affect your home search, it would be our pleasure to discuss it with you.
Source: https://www.oaciq.com/en/pages/latest-amendments-to-the-reba
Disclaimer: Information made available in this blog in any form is for information purposes only. It is not, and should not be taken as, legal advice. It is not in any circumstances a substitute for the advice or services of a notary or lawyer. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.
