7. Disclosing the existence of any transaction proposal
7.1 First refusal clause (Clause R2.2, Annex R – Residential)
The licence holder must inform all other licence holders with whom he is in “collaboration mode” of the existence of any transaction proposal, whether accepted or not, as soon as he learns of its existence, without revealing the substance thereof1. He must do so immediately upon learning of the existence of such a transaction proposal.
Keeping brokers and potential buyers in the dark about the existence of a promise to purchase is an unfair procedure and can give an undue advantage to one of the parties. Furthermore, failing to disclose the existence of another promise to purchase constitutes unfair treatment against the parties concerned, in addition to depriving the seller of the chance to obtain the best possible price and conditions.
When there are several licence holders in “collaboration mode,” there is no exception to the rule: all must be informed aware of any new promise to purchase being presented. They need to know how many potential buyers have made a transaction proposal. The seller’s broker must treat all parties to the transaction fairly. However, he is not required to disclose the existence of any counter-proposals, amendments or “enhancements” to promises to purchase.
When a transaction proposal is accepted conditionally, the seller’s broker may, in the appropriate section of the detailed description sheet, mention the existence of this conditional promise to purchase (CPP). He may specify the fulfilment deadline of the condition that is furthest away, but he may also share this deadline verbally further to a request by a broker representing a buyer. He should also mention the existence of a first refusal clause in the appropriate section of the description sheet.
It is not mandatory to mention the existence of a CPP on the description sheet, but the broker must discuss with his selling client the consequences of including or not including such a mention, and of the options available to the client, always with a view of promoting the client’s interests.
In addition, while the licence holder has an obligation to disclose the existence of any transaction proposal received, he may not reveal the substance thereof to anyone. Therefore he may not disclose the expiration date of other promises to purchase, the offering price or any other condition contained in the proposals received.
1 Section 96 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising
7.1 First refusal clause (Clause R2.2, Annex R – Residential)
The seller may continue to offer the immovable for sale regardless of the acceptance of a promise to purchase. If he accepts a new promise to purchase, as soon as all the conditions of this new promise have been fulfilled (excluding signing the deed of sale in the presence of the notary and obtaining cancellation of the promise to purchase), the seller must send the first buyer a notice asking him to cancel his conditional promise to purchase to make it final and unconditional, or to render his promise to purchase null and void. The notice must give the buyer a 72-hour period in which to exercise one or the other of these options.
However, in addition to this mechanism and due to his obligation to collaborate, the seller’s broker must notify the first buyer (or the broker representing him) of the existence of the second promise to purchase as soon as he learns of it. He must therefore do so even if potential conditions have not yet been fulfilled, rather than at the time of acceptance or the lifting of conditions of the promise to purchase, which triggers the 72-hour notice.
