9. Ceasing of activities by a broker acting on behalf on a real estate agency
A broker who plans to cease his activities due to a career change or retirement, or who wishes to change agencies or to act on his own account, must plan this change in advance and respect each of the steps to ensure that his clients are never left in the lurch. This is a matter of public protection. Clients must be informed of the situation, the consequences on their business relationship, and the choices they will have to make.
As much as possible, the ceasing of the broker’s activities must be synchronized with the conclusion of the transactions in progress. It is preferable, for example, to wait until the conditions of current transactions have been fulfilled.
In the event that certain files cannot be finalized before the broker’s licence is suspended or revoked, they absolutely must be taken over by a licensee who holds a valid licence.
The broker must inform his agency executive officer of his decision as soon as possible and come to an agreement on the terms of his departure. Remember that the best thing to do for the broker is not to change agencies or status until conditions on transactions in progress have been fulfilled, in order to avoid any potential issues related to his replacement.
Responsibility of the agency executive officer
Managing the professional activities of his brokers is at the core of the AEO’s daily responsibilities.
When a broker notifies his AEO that he will be ceasing his activities, or leaving for another agency or to act on his own account, the AEO has an obligation to advise and guide the broker through each of the steps and ensure that the agency’s obligations are met.
Responsibility of the agency
Since brokerages contracts are entered into with the agency, the agency is the one responsible for sending the change of agency notices to each client bound by a brokerage contract. If the agency fails to send the notice, the broker will be responsible for doing so. It is important to remember that the broker cannot send notices to his clients without his agency’s knowledge.
The agency, under the direction of its AEO, must:
- identify the broker’s current brokerage contracts, including any co-listings, as well as any transaction proposals in progress, whether accepted or not. If the broker works within a team, all brokerage contracts for that team must be identified;
- inform clients;
Once the contracts have been identified, the clients themselves must be notified in writing of the change of situation and the options available to them, i.e.:
- continue to deal with the broker at his new place of business (if applicable);
- continue to deal with the agency (another broker will be appointed and the client will be notified)
- cease doing business with the broker or the agency and terminate the brokerage contract.
Under residential brokerage contracts, if the client does not respond to the agency no later than the day on which the broker ceases to carry on activities for the agency, the brokerage contract shall be deemed to be terminated as of that day.
- identify any cases of referral of clients to another licence holder, a mortgage lender or other and for which the agency or the broker has a remuneration agreement that has not yet been settled;
- determine the correct procedure with the agency’s broker, if applicable, and for each of the files mentioned above;
- identify any remuneration to be paid or received;
If the client decides to continue doing business with the agency, the broker leaving the agency could be entitled to remuneration. It will depend on what has been agreed to with the AEO in his employment contract or prior to his departure.
- identify any advances on remuneration or expenses provided for in any of the broker’s brokerage contracts which remain in whole or in part in the trust account;
To this effect, it is necessary to identify the clients who will have to be reimbursed in whole or in part due to the termination of the brokerage contract, as the conditions entitling the broker to remuneration were not fulfilled or because no expense had yet been incurred at the time of termination of the brokerage contract.
It is also necessary to identify the sums to be transferred to the new trustee in cases where the client chooses to follow the broker.
- in the transaction records, identify any sums representing deposits, security deposits or other provided for in the transaction proposals and which remain in the trust account;
More specifically, it is necessary to identify the transaction records that will be finalized after the change of agency or status. Any sums will need to be transferred to another trustee, such as the new agency.
- identify any sums held in special trust accounts;
- identify any investments that will mature after the date of the change. Such investments will need to be cashed in before maturity.
For each sum held in trust, the agency must:
- obtain the written consent of the parties to the change of trustees;
- if applicable, obtain in writing any other change to the agreements between the parties;
- obtain the written consent of the licence holder trustee for the transfer of the sums;
- transfer the investments in special accounts to the general trust account and reimburse the interest to the depositors;
- transfer (by electronic transfer, cheque, letter of exchange or transfer slip) the sums in the general trust account to the new trustees or others based on the agreements and changes made;
- The new trustees will need a copy of the records with which transferred sums are associated in order to be able to manage them properly.
- reimburse clients for sums held in trust as advances on remuneration or expenses as soon as the brokerage contracts are terminated;
- comply with all record-keeping obligations, including making entries in the trust accounting register and maintaining all supporting documentation on file.
Responsibility of the broker
Once these steps have been completed, the broker leaving the agency must notify the Certification Department by completing and forwarding the form appropriate to his situation, and pay the applicable fees.
- For a change of agency: use the form Notice of change of real estate agency (PDF).
- To practice within a business corporation: use the form Application for authorization to practice within a business corporation (PDF) signed by the agency executive officer or an authorized signatory, to confirm the consent of the new agency.
- To act on one’s own account: use the form Application for licence modification • Real estate broker (PDF).