Conduct & Trade Practices FAQs
Have you ever had a "How do you..." question when it comes to trading in real estate? Here you will find a growing list of frequently asked questions related to conduct & trade practices.
Adding a Second Buyer to an APS
STEP TWO: Complete an amendment to the APS, adding the new buyer. The following clauses for the amendment clearly outline the addition of the new buyer (insert the individual’s name where the clauses reference [new party]): “a. [New party] is entering into the amendment to become a party to the agreement of purchase and sale (“the Agreement”) dated* the [date] day of [month] between [name of originally listed buyer] as buyer and [name(s) of seller(s)] as seller. The Agreement and the existing parties to the Agreement are entering into this amendment to accept the [new party] being added to the Agreement as buyer; and” “b. [New party] confirms their acceptance of all of the terms of the Agreement. *Date refers to the date of acceptance.
STEP THREE: The added buyer and all of the original parties must all sign the amendment to the APS consenting to the additional buyer being added.
STEP FOUR: (Optional) Have the added buyer initial and date the bottom of each page of a copy of the original APS, the PDS, the Schedule of Leased/ Rented Equipment and any other relevant real estate documents, as evidence that the new buyer clearly read and understood all terms.
Advertising a Property as 'Coming Soon'
The Commission does not have a mandatory form to offer 'Coming Soon' advertising to a seller, however Brokerages may create their own. Any agreement that is used for this purpose must include:
All ‘Coming Soon’ advertisements, whether it is a social media post, a lawn sign or an online ad, must include the following:
Calculating the Number of Pages in an Agreement of Purchase and Sale
What isn’t included in this page number and does not form part of the Agreement of Purchase and Sale? Some examples are: a Counter Offer, Property Condition Disclosure Statement or a Transaction Brokerage Agreement.
Cash backs & Inducements
To offer a cash back, the purchase price could be reduced by the cash back amount and the seller could provide the buyer with a cheque or a money order, or any other arrangement agreed to in writing by the buyer and seller. Documentation of the cash back also must be provided to the buyer’s financial institution.
An inducement is a reward to a buyer or a seller on a specific transaction that results in the completion of that transaction. In this situation, a brokerage (or brokerages) offers an arrangement specific to the transaction to facilitate the closing of the transaction. For example, a brokerage may offer to provide new appliances to a buyer if they proceed with the purchase or offer a commission reduction to a seller. As with documenting cash backs, you need to have a written record of the inducement and how and when it will be delivered
Completing the Brokerage Representative line
When using WebForms, you may encounter instances where it automatically inserts industry members names into that line. In this instance, delete the inserted text and physically sign the line when filling out the form.
Completing the Remuneration Clause in the Buyer (Designated) Brokerage Agreement
If that amount is unclear at the time the brokerage agreement is completed, or if the remuneration changes prior to the facilitation of an offer (i.e. a range to a set fee), the brokerage agreement must be amended to reflect the accurate remuneration once that remuneration amount is known.
Duties unlicensed employees at the brokerage CANNOT do
In real estate transactions…
In working with real estate licensees…
Extending a Contract
The compliance inspectors, through the course of inspecting transaction files, have seen instances where brokerage agreements were amended to extend the length of the contract, but the amendments were created and signed after the original seller brokerage agreements expired. This is just plain wrong. When a contract expires, it ceases to exist. And, you cannot amend something that no longer exists.
Remuneration for Teams
The licensees with the brokerage are not parties to any contracts entered into between them on behalf of the brokerage and the consumers who have engaged the brokerage services. A review of applicable case law also demonstrated that licensees are only entitled to compensation from the brokerage with which they are licensed.
Buyers may have specific areas of concern that would cause them to avoid a property that does not include cosmetic or structural issues. These intangible attributes to a property may cause it to be considered “stigmatized,” meaning it has had a traumatic or horrific circumstance occur in or near it, but does not specifically effect the appearance or function of the property itself.
See our full article on how to deal with stigmatized properties here.
Taking Contracts with you when Changing Brokerages
If the broker and clients agree in writing to transfer their representation to another brokerage that is fine, but you cannot approach clients and interfere in their current contract. If your current broker agrees to pay you for your services for the transaction you facilitated, payment must be issued to your new brokerage, not to you specifically.
For more information, see our full article here.
See our full article on Deposits and Disbursements here
Trust cheques must be used consecutively by number when disbursing funds from trust account. The trade must be identified on the trust account cheques (typically on the memo line) by noting the trade address, buyer’s name and trade number. All voided cheques must also be accounted for.
An EFT is an electronic transfer of money from one bank account to another, which is performed similarly to paying a bill through online banking. This method can only be use when transferring funds from the brokerage’s trust account to the brokerages general account. EFTs are different from email money transfers (EMT), where a banking service allows users to transfer funds between personal accounts using email and their online banking service (i.e. Interac E-Transfers).
Any EFT performed must meet specific criteria to be compliant. The EFT must include a confirmation number produced by the financial institution, which must also appear on the trust account bank statement. If you are uncertain if a confirmation number will appear on your bank statement, contact your financial institution to verify prior to making the disbursement.
At the time of the disbursement, the online EFT confirmation must be printed off, attached to your monthly trust record keeping and reference the trade. The same confirmation number must show on all trust account record keeping, including individual trust records and the trust control ledger.
Still unsure if your EFT would comply? Use this checklist for reference. EFT confirmations must include:
Using Electronic Signatures
If the brokerage chooses to make an electronic signature service available to their clients, the brokerage must retain copies of all signed agreements and acknowledgements (i.e. Certificate of Authenticity) which includes the e-signature of a client or customer of the brokerage. These certificates can be retained in either hardcopy or saved electronically at the brokerage. It is not necessary for the brokerage to retain certificates from cooperating brokerages provided it is agreed that it represents a legal signature.
For more information, see our Common Errors when using Electronic Signatures
Excess Trust Deposits
When using the Commission’s Agreement of Purchase and Sale, the Buyer and Seller consent to the early release of excess trust funds in clause 1.3 of the Agreement. Clause 1.3 states:
When not using the Commission’s Agreement of Purchase and Sale and the broker holding the funds requires written mutual consent (an Amendment), refer to the clause book which includes a clause that can be used in excess trust deposit situations.