Chapter 2: Regulation respecting the conditions of practice

Chapter: Regulation Respecting the Conditions of Practice

1. Overview of the Chapter

This chapter covers the core regulatory framework governing the day-to-day professional conduct of real estate brokers and agencies in Quebec. Its primary source is the Regulation respecting the conditions of practice of a real estate broker (hereafter “the Regulation”), issued under the Real Estate Brokerage Act. The Regulation establishes mandatory rules for handling client funds, maintaining trust accounts, managing conflicts of interest, ensuring confidentiality, advertising, presenting offers, record‑keeping, and the specific responsibilities of the executive officer (executive broker). Mastery of these rules is essential for both ethical practice and legal compliance, and they form a significant portion of the licensing exam.

2. Key Concepts Explained

2.1 Trust Accounts and Handling of Funds Held for Others

The trust account is a cornerstone of client protection. It is a separate bank account (or accounts) where all money received by the agency on behalf of a client—such as deposits, down payments, or other funds—must be deposited without delay. The rules are strict:

• Opening a trust account: An agency must have an operational trust account before receiving any client funds. This applies from the very first transaction. No funds belonging to others may be held in the agency’s general operating account.
• Depositing funds: Any cash, cheque, or electronic transfer received as a deposit or other client money must be deposited into the trust account promptly. The Regulation does not permit holding such funds in a personal account or in the agency’s business account.
• Withdrawing remuneration (commission): The broker or agency may only withdraw their remuneration from the trust account when all conditions of the transaction have been fulfilled and in accordance with the payment terms set out in the brokerage contract. Withdrawing commission before closing (e.g., before the deed of sale is signed or conditions lifted) is prohibited. Moreover, any remuneration must be paid to the agency, not directly to an individual broker. A client cannot pay a broker directly in cash or otherwise bypass the agency.
• Prohibition on using trust funds: Trust funds are the exclusive property of clients. They cannot be used for any other purpose—even temporarily. Borrowing from the trust account to pay an office expense, even with the intention to repay the next day, is a serious ethical and regulatory violation.
• Closing a trust account: When an agency permanently ceases operations and still holds funds in trust, it must obtain approval from the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ) before closing the account. This ensures that all funds are properly remitted to the rightful parties.

Record‑Keeping for Trust Accounts

• Separate accounts per client: A separate and precise accounting record must be maintained for each client. This is typically done through a ledger or computer journal that tracks each inflow and outflow of funds for that specific client.
• Traceability: All entries must show the date, amount, payor/payee, and purpose of each transaction. The goal is absolute traceability of every dollar held in trust.
• Retention period: All trust account records (including ledgers, bank statements, cancelled cheques, and deposit slips) must be kept for at least six years after the file is closed.
• Location of records: The agency’s records, including trust account records, must be kept at its principal establishment. They must be accessible for inspection at all times.
• Inspection without notice: The OACIQ or its inspectors have the authority to examine trust records without prior notice during regular business hours. No warning is required.

2.2 Duties of Disclosure and Managing Conflicts of Interest

Brokers must act in the best interests of their clients and avoid any situation that could create a conflict of interest. The Regulation mandates specific disclosure obligations:

• Family relationship or personal interest: If a broker discovers that a person with whom they have a family, business, or close personal relationship (e.g., a brother) wishes to make an offer on a property for which the broker holds a listing, the broker must immediately disclose this potential conflict of interest to the seller (their client) and to the agency. The seller must be informed of the relationship so they can make an informed decision. The broker cannot proceed without this disclosure.
• Dual agency (acting for both buyer and seller): When a broker or agency represents both the seller and the buyer in the same transaction, this constitutes dual agency. The Regulation requires that:
• The broker must explain the implications of dual agency to both parties.
• The broker must obtain written consent from the parties on the prescribed form titled “Disclosure and Consent to Dual Agency” (or its official French/English name per the Regulation). No verbal consent is sufficient.
• Without such written consent, the broker cannot proceed to facilitate the transaction.

2.3 Confidentiality

The duty of confidentiality is ongoing and does not end at the conclusion of a transaction.

• Scope: Any confidential information obtained during the course of a mandate—including the sale price, financial details, personal circumstances, or negotiation strategy—remains confidential.
• Post‑transaction: Even after the deed of sale is signed, the broker cannot disclose the exact transaction price to a journalist, neighbour, or any third party without the explicit consent of the client (the seller or buyer, depending on whose information it is). There is no automatic expiration of confidentiality.

2.4 Presentation of Offers

A broker has a fundamental duty of loyalty and diligence to their client (the seller) regarding offers to purchase.

• All offers must be presented: When multiple offers are received for the same property, the broker must present all offers without delay. They cannot favour one offer over another—for example, delaying a lower offer to allow a preferred buyer to amend theirs.
• Prompt presentation even when the seller is unavailable: If the seller is unreachable (e.g., on vacation), the broker must make immediate and diligent efforts to contact them. This includes phone calls, emails, text messages, or other means. The broker cannot simply wait until the seller returns. The obligation is to present the offer without delay, using best efforts.

2.5 Advertising and Solicitation

All advertising by a broker or agency must comply with transparency and professionalism rules.

• ‘For Sale’ sign: When a ‘For Sale’ sign is placed on a property, it must clearly indicate the name of the real estate agency. The individual broker’s name is not mandatory on the sign, but the agency name is required.
• Other advertising (print, online, telephone): The Regulation requires that any advertisement for brokerage services include at minimum: the name of the agency and its contact information, and a clear indication of the nature of the services being offered. The goal is to ensure the public can identify the professional responsible.
• Telephone solicitation: At the beginning of any telephone solicitation, the broker must immediately identify themselves and their agency. They must state their name and the name of the agency they represent. This is a rule of transparency and consumer protection.

2.6 Remuneration and Payment Rules

• Payment to the agency, not the individual broker: All commission or remuneration for brokerage services must be paid to the agency (the legal entity holding the licence). A client cannot pay a broker directly in cash or by any other means. The agency then compensates the individual broker according to internal agreements.
• Timing of payment: Remuneration can only be collected when the transaction is completed (all conditions fulfilled). Payment cannot be requested or accepted before that point, even if the client offers an advance.

2.7 Written Contracts

The Regulation establishes strict form requirements for brokerage contracts.

• Requirement of a written contract: A brokerage contract (listing agreement, brokerage mandate) must be in writing to be valid and enforceable. Verbal agreements are not permitted. This rule also applies to promises to purchase and other transactional documents.
• Prescribed forms: The OACIQ has prescribed forms for many standard documents (e.g., the promise to purchase, the brokerage contract). While the Regulation does not always mandate using the exact OACIQ form, the content must respect the regulatory requirements. For dual agency, the specific “Disclosure and Consent to Dual Agency” form is mandatory.

2.8 Responsibilities of the Executive Broker

The executive broker (or the officer responsible for the agency’s administration) bears ultimate responsibility for ensuring the agency’s compliance with the Regulation.

• Responsibility for trust account: The executive broker must ensure that the agency holds a compliant trust account, that funds are deposited correctly, that records are maintained properly, and that withdrawals are only made when permitted.
• General oversight: The executive broker is accountable for all regulatory obligations of the agency, including advertising, record‑keeping, and training of brokers.

3. Important Regulations, Procedures, and Code of Ethics Provisions

Although the chapter focuses on the Regulation respecting the conditions of practice, these rules are closely related to the Code of Ethics of the Quebec Real Estate Broker (RLRQ c. C‑73.2, r. 5). Key regulatory provisions from the Regulation include:

• Section on trust accounts – defines opening, operation, and closure of accounts.
• Section on records and registers – specifies separate client ledgers, retention for six years, location at principal establishment.
• Section on advertising and signs – requires agency name on for-sale signs; prohibits misleading content.
• Section on conflicts of interest – mandatory disclosure and written consent for dual agency.
• Section on presentation of offers – duty to present all offers without delay.
• Section on confidentiality – persists after mandate ends.
• Inspection powers – OACIQ can inspect without notice.

Relevant procedures:

• Closing a trust account upon cessation of activities – must notify and obtain OACIQ approval.
• Responding to an inspection – all records must be available at the principal establishment.
• Obtaining written consent for dual agency – use the prescribed form; explain implications first.

4. Common Relationships Between Concepts

Understanding how these concepts interrelate is crucial for exam application:

• Trust account + remuneration: The trust account is not only for deposits but also for holding commission until it is legally earned. Withdrawal is only permitted when the transaction closes, tying the concept to the completion of conditions.
• Conflict of interest + disclosure + dual agency: Both personal relationships and dual agency trigger a duty of disclosure. In both cases, the client must be informed and give informed consent (in writing for dual agency). Non-disclosure is a violation that overlaps with the duty of loyalty and confidentiality.
• Confidentiality + advertising: A broker cannot use a client’s sale price in a testimonial or press release without consent. This connects the duty of confidentiality to the rules on advertising.
• Presentation of offers + duty of loyalty: The obligation to present all offers promptly is a direct expression of the broker’s duty of loyalty to the seller client. Even when the seller is absent, the broker must still act diligently.
• Executive broker + trust account compliance: The executive broker’s responsibility ties together the opening, operation, and inspection of the trust account. If the trust account is non-compliant, the OACIQ will look to the executive broker.
• Written contracts + enforceability: The requirement for written contracts affects all other concepts: a verbal mandate is invalid, so any attempts to claim commission or enforce terms rely on having a written contract. This also affects the timing of remuneration (the contract defines when conditions are fulfilled).
• Record retention + inspection: The six-year retention period (from file closure) must be calculated correctly. If a file is closed in 2023, the records must be available until at least 2029. This directly supports the OACIQ’s power to inspect without notice.