10. Ceasing of activities by a real estate agency or a broker acting on his own account
10.1 Ceasing of activities by a real estate agency or a broker acting on his own account
10.2 Ceasing of a real estate agency's activities and right to remuneration
10.1 Ceasing of activities by a real estate agency or a broker acting on his own account
A ceasing of activities must be planned and be carried out in stages to ensure public protection. Clients must be informed of the situation and of the choices they will have to make.
As much as possible, the agency or broker acting on his own account must synchronize the ceasing of activities with the conclusion of the transactions in progress. It is preferable, for example, to wait until the conditions of transactions in progress have been fulfilled and all sums held in trust accounts have been cashed in prior to ceasing activities.
In the event that files cannot be finalized, they must absolutely be taken over by a licensee who holds a valid licence.
Since he will continue to practice real estate brokerage, he can offer clients the opportunity to continue doing business with him.
He will have to come to an agreement with an agency or another broker acting on his own account to take over his records and registers, other than those relating to his accounting, for a period of six years from the date of final ceasing of activities. A broker acting on behalf of an agency is not authorized to keep the records and registers of a broker acting on his own account.1
1 Section 19 of the Regulation respecting records, books and registers, trust accounting and inspection of brokers and agencies.
Responsibility of the agency or the broker acting on his own account
For a ceasing of activities, the agency or broker acting on his own account must:
- identify the broker’s current brokerage contracts, including any co-listings, and send a written notice to clients informing them of the date of ceasing of activities and explaining the options available to them;
Good to know!
The OACIQ has developed standard notices adapted to the various scenarios, which include a reply section for the contracting party.
- identify any accepted transaction proposals (sale and lease) and determine what can and cannot be finalized before the ceasing of activities:
- transactions whose conditions have been fulfilled and which will be notarized before or after the date of ceasing of activities;
- transactions whose conditions have not yet been fulfilled and which could be notarized before the date of ceasing of activities;
- transactions whose conditions have not yet been fulfilled and for which the date of signing of the notarized act would fall after the date of ceasing of activities;
- leasing transactions that could be subject to a lease renewal;
- identify any cases of referral of clients to another licence holder, a mortgage lender or other and for which the agency or the broker acting on his own account has a remuneration agreement that has not yet been settled;
- identify any remuneration to be paid or received;
- enter into an agreement with an agency or broker acting on his own account to take over the records and registers, other than those relating to accounting, for a period of six years from the date of final ceasing of activities;
- perform a bank reconciliation of trust accounts (general and special) prior to making any refunds or transfers;
- for an agency, determine with each of the agency’s brokers, if applicable, and for each of the above-mentioned records, the proper procedure to follow;
- identify any advances on remuneration or expenses provided for in any brokerage contract which remain in whole or in part in the trust account;
- 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 ceasing of activities. Any sums will need to be transferred to another trustee.
- identify any sums held in special trust accounts;
- identify any investments that will mature after the date of ceasing of the agency’s activities. Such investments will need to be cashed in before maturity.
Note that depending on the nature of the agreement with the client, the client will be entitled to the full amount of the interest initially stipulated and, upon request, the agency will have to reimburse the client for the difference between the old and the new interest rate granted by the new financial institution.
Once the sums have been identified, the agency or broker acting on his own account 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;
- cash in the investments in special accounts by transferring them to the general trust account and reimburse the interest to the depositors;
- reimburse clients for sums held in trust as advances on remuneration or expenses as soon as the brokerage contracts are terminated;
- 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.
- comply with all record-keeping obligations, including making entries in the trust accounting register and maintaining all supporting documentation on file.
- reconcile the trust accounts once the balances are at zero.
Once these steps have been completed and the agency or broker acting on his own is ready to cease operations and proceed with the closure, the Certification Department must be notified in writing of the date of revocation of their licence and pay the applicable fes. The list of fees is available under the “Administrative Fees” section of this page.
Once the licence of the agency or the broker acting on his own account has been account, the following must be done:
- Close the general trust account;
- Generate the Trust Transaction Report for the current year with a period end date corresponding to the date of closing of the account;
- Forward without delay the records and registers to the agency or broker acting on his own account having accepted to take them over;
- Complete the form Mandatory declaration • Ceasing of activities by a real estate agency or by a real estate broker acting on his own account (PDF);
- Send the following documents to the OACIQ Inspection Department:
- the Trust Transaction Report for the current year, with the trust accounting register and bank statements for the period and document from the financial institution confirming the closing of the trust account;
- the Trust Transaction Report for the current year, with the trust accounting register and bank statements for the previous year if these documents have not already been sent;
- the Register of disclosure notices for the current year;
- the Register of disclosure notices for the previous year if it has not already been sent;
- The form Mandatory declaration • Ceasing of activities by a real estate agency or by a real estate broker acting on his own account (PDF).
Record conservation following a ceasing of activities
The obligation to conserve records and registers lies with the holder of an agency licence or a broker acting on his own account licence.
The records and register must be kept for a period of six years from the date of ceasing of activities.
The OACIQ must know at all times where the records and registers are being kept and must be informed of any change of location for the entire conservation period set by regulation.
IMPORTANT!
When ceasing his activities, a licence holder who has inherited the records and registers of another licensee who left the profession must ensure to pass on not only his own records and registers to a broker acting on his own account or an agency, but also the records and registers with which he was entrusted when the prescribed conservation period (at least 6 years, except if they constitute evidence in a civil, disciplinary, penal or criminal proceeding) has not been completed.
The broker or agency who receives records and registers from another licensee must:
- abide by the same obligations respecting the conservation, use and destruction of records and registers as for his own.
- within 30 days following receipt, notify the OACIQ in writing.
10.2 Ceasing of a real estate agency's activities and right to remuneration
When a real estate agency’s licence is suspended or revoked, many questions arise concerning the right to remuneration and the method of payment, both for the agency itself and for its brokers. We remind you that when the licence of a real estate agency is suspended or revoked, the licences of all the brokers carrying out their activities within this agency are also suspended. Therefore a real estate broker who finds himself in this situation is no longer authorized to practise his profession and carry out brokerage transactions until such time as he reactivates his licence with another real estate agency.2 Following are the principles that apply to the payment of remuneration.
Remuneration payable to the real estate agency
Section 35 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising stipulates that the broker acting for an agency must, when receiving remuneration in connection with a transaction, pay the remuneration without delay to the agency for which he or she carries on brokerage activities. Consequently, the broker working for an agency cannot ask to be remunerated directly by the notary at the signing of the deed of sale. The notary must abide by clause 11.4 of the mandatory promise to purchase regarding the payment of remuneration to the real estate agency, even if the agency’s licence is no longer in effect at the time of singing. The notary will therefore have to make the payment to the real estate agency identified in the promise to purchase and may not under any circumstances pay remuneration directly to a real estate broker who requests it.
When the licence of the seller’s broker’s agency is suspended or revoked
For each notarized transaction, the notary will pay remuneration to the real estate agency after the signing and registration of the deed of sale. For transactions for which, in accordance with clause 4.3 of the promise to purchase, a deposit was deposited in the agency’s trust account, such deposit will have to be transferred to the acting notary who requires it prior to the signing of the deed of sale. In addition, the agency that collected the deposit can never pay itself from the sums held in its trust account before the publication of the deed of sale. Following the signing of the deed of sale and after receiving its remuneration or the confirmation of the publication of the deed of sale from the notary, the real estate agency will in turn be able to pay remuneration to its “former” brokers, in accordance with the terms of their work contracts.
When the licence of the buyer’s broker’s agency is suspended or revoked
Like in any other transaction, the notary will pay the remuneration to the seller’s broker’s agency, which can then pay the buyer’s broker’s agency following the signing of the deed of sale. The notary could also take care of allocating the remuneration and pay it directly to the buyer’s broker’s agency if the seller’s broker identified in the promise to purchase has instructed him to do so in writing. The buyer’s broker’s agency will then be able to pay remuneration to its “former” brokers, in accordance with the terms of their work contracts.
One thing is sure, a real estate agency whose licence is suspended or revoked is entitled to its remuneration for any brokerage transaction carried out while its licence was in effect. The methods of payment remain exactly the same for the acting notary. Anyone who has doubts regarding the status of a real estate agency’s licence at the time a real estate transaction was carried out can verify the licence history with the OACIQ. The same principle applies to real estate brokers who were employed by an agency whose licence has been suspended. They are entitled to their remuneration from their former agency, even if this agency’s licence is suspended or revoked. At no time can they require that the notary pay them directly. In case of dispute between real estate brokers and their former agency, the brokers will have to appeal to civil tribunals to enforce their rights.
2 See the article: A suspended or revoked licence bars the holder from practising
