Brand new condos: salespeople are not all real estate brokers
However there’s an important element that’s often overlooked during the purchasing process: the people that sell you brand new homes are not all real estate brokers.
What does this mean?
First, you should know that the transaction is not subject to the Québec Real Estate Brokerage Act.
Second, the Real Estate Indemnity Fund and the Professional Liability Insurance Fund (FARCIQ) cannot help you unless at least one of the two parties (buyer or seller) is a licensed real estate broker.
What’s the difference?
Robert Nadeau, President and CEO of the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), says that if developers employ salespeople, they still have responsibilities.
When a developer hires a seller, s/he hires “an employee; [the developer] can’t deal with someone who’s self-employed, says Nadeau. There have been cases where [developers] contracted self-employed people because they wanted to avoid the social care charges… ” This means that, in most cases, the people hired are experienced salespeople.
This is confirmed by Jean -Philippe Després , real estate developer . “There are not many career salespeople in Montreal. This means that they are careful with what they do: they want to preserve their reputation. ”
While the consumer protections linked to real estate brokers do not apply when dealing directly with the developer’s employees, there still are buyer securities that apply. “When buying a new home, the consumer should definitely make sure that the developer is registered. If it’s the case, the deposits are guaranteed,” says Mr. Després. When a developer has a license from the Régie du bâtiment du Québec (RBQ) and when your purchase is covered by the Guarantee Plan for new residential buildings, your deposits are guaranteed, with or without the presence of a real estate broker.
Almost the same across Canada
The situation is the same almost everywhere in Canada: developers are not obliged to hire real estate agents to sell their homes. In fact, in many cases, an explicit law exempts developers from hiring real estate brokers.
Stephanie Fournier, Head of Media Relations for the OACIQ , says: “The rule is very similar from a province to another.” According to the documents obtained by Fournier, Alberta, British Columbia, New Brunswick, Ontario and Saskatchewan all have a provision in their law that allows developers to hire their own salespeople.
On the other hand, Manitoba allows developers of single family homes to sell their own products, but not condos – they must hire registered brokers.
In Newfoundland-and-Labrador, developers can sell up to three properties per year by their own means. If this number exceeds three, the company and its vendors must obtain “limited accreditation.”
According to communications officials of the Real Estate Council of Alberta , “there has been a discussion taking place within the real estate industry for a number of years on the question of whether the sales employees of a new home builder should be licensed. Most of the people we have spoken with on this issue believe consumers need to be protected and support the licensing of these sales employees. So far, the new homebuilding industry has opposed any efforts to licence their sales employees.”
Why do developers prefer to do business with vendors instead of hiring licensed brokers? The official position of the developers will not be known as the leaders of the Association provinciale des constructeurs d’habitations du Québec (APCHQ) refused our interview requests.