ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN CANADA - QUÉBEC]

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and tailored documents. They generally set out the legal description of the immovable property, the sale terms including price, deposit, conditions to be met to the satisfaction of the purchaser (such as financing, title search, environmental and other inspections), the outside closing date and the date and time by which the offer must be accepted, failing which it will be null and void. Purchase and Sale Agreement In both residential and commercial sales, the purchase and sale agreement takes the form of a deed of sale, signed by both parties, which sets out all the terms and conditions of the transaction, including the date of occupancy, the warranties provided by the seller ( e.g., title, condition of the property, seller’s matrimonial regime in the case of individuals, seller’s tax residency), the purchase price and payment terms, as well as the 5% federal goods and servic es tax (“GST”), 9.975% Québec sales tax (“QST”) and mutation taxes due on the transaction. The deed must be signed before a Québec notary if there is a balance of price or if the buyer is assuming an existing encumbrance; otherwise, it may be signed either in notarial form (which is the general practice) or under private signature before two witnesses, who must also sign. II. BROKERS AND AGENTS Real estate brokers and agents are governed by the Real Estate Brokerage Act (Québec) and its Regulations. All brokers are licensed real estate agents, but not all agents are licensed brokers. Real estate agents work for a broker or brokerage firm, either as salaried employees, on commission or both, and the broker is legally responsible for its agents. Agents or brokers in Québec may act for the seller or the purchaser (although the latter is less common). As noted above, the brokerage contract is a prescribed form in residential, but not

commercial, land sales. Under Québec case law, even if the seller retains the broker or agent, they are still obligated to deal honestly with both parties and may not mislead the buyer. Where the broker or agent acts only for the seller, the seller pays the commission; where both parties are represented by brokers or agents, the two brokers or agents typically share the commission. The obligation to pay the commission is governed by the brokerage contract, but generally in order to trigger the obligation to pay a commission, the broker or agent must have introduced the buyer and seller. There is usually a clause in exclusive brokerage contracts protecting the rights of the agent(s) to collect a commission if the property is sold within a specified period (generally 90- 180 days) after its expiration to a party introduced to the property while it was in effect. III. BUYER’S INSPECTIONS Residential: Most offers are made conditional upon inspection and/or financing, although in a heated real estate market, a buyer who is prepared to make an offer without conditions may have an advantage if there are competing bids. The buyer will typically engage a licensed building inspector, who will visit the property and check for interior and exterior structural issues, verify the heating, ventilation, plumbing and electrical systems and the type and state of the roof, underground storage tanks, etc. and generally identify any issues which should be rectified, and which could influence the value of the property (and therefore potentially reduce the price). The buyer’s notary will conduct a formal title search on the property to establish the chain of title and to identify any hypothecs, prior claims, other encumbrances, servitudes (easements), concurrent or priority rights of ownership, and any other right or charge reducing the value of

ILN Real Estate Group – Buying and Selling Real Estate Series

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