Quebec real estate industry groups want a clear definition of real estate brokerage and who can practise it.
That’s the message it’s sending in the wake of a Quebec Finance Ministry report on the state of the act governing real estate brokerage. The report, tabled in May, gave interested parties until Sept. 30 to respond. With the deadline for submissions past, the government will now study possible changes to the act, which came into force in 2010, but has been amended since then.
The government report says the brokerage industry is at a crossroads. It surveys the industry, asking questions rather than making recommendations. Among the questions it asks:
Should brokerage be defined — which the act does not do at the moment — and limit certain actions to brokers?
Should the act govern the activities of for sale by owner companies (FSBOs)?
What regulatory model should be chosen to protect the public’s interests?
Both the Quebec Federation of Real Estate Boards and its regulatory body, the Organisme du courtage immobilier du Québec (OACIQ), are on the same page about defining the activities of a real estate broker. “A clear definition would benefit the public and its protection,” Patrick Juaneda, president of the board of directors of the QFREB, wrote in an email.
There are three models for selling in Quebec — with an agent, without an agent and with the help of FSBO agencies.
The government report says FSBO companies are increasingly present in real estate transactions, even though real estate brokers and agencies still hold the lion’s share of the market. “The brokerage industry, with the support of the OACIQ, is waging an intense media battle against FSBO companies to preserve its market share.”
The OACIQ has also waged a court battle, claiming that prominent FSBO player DuProprio is acting as if it is authorized to carry out real estate brokerage activities, despite having no licence to do so. A few months after it lost on appeal, in 2013, the OACIQ filed a motion for a declaratory judgment in Quebec Superior Court.
The QFREB is also asking Finance Minister Carlos Leitão to clarify the Real Estate Brokerage Act so that “real estate coaches and FSBO companies become subject to the provisions of the act.”
“The public is misled or confused by the use of titles, such as coaches and advisers, that mimic the legal titles given to real estate brokers while providing services that are similar to those of a real estate broker,” it writes.
It says the public has no protection or guarantee on the services of an FSBO, while real estate brokers have a code of conduct and are covered by a real estate indemnity fund and the professional liability insurance fund. The government report states that FSBO services are covered by legal provisions that protect people with whom they enter into a contract.
“We need a definition of brokerage in the law,” said Robert Nadeau, president and chief executive of the OACIQ. “When somebody gives advice to a buyer, seller or renter to help them do a transaction, for us it is real estate brokerage.
“We have a broad definition of a real estate broker.”
There are 16,000 brokers in Quebec, Nadeau said, who have been regulated by law since 1963. “Why now would it be decided that part of what a broker does is outside the legal framework?
The OACIQ is perceived to represent the brokers, the government report states, naming activities outside of its sole mandate of protecting the public.
“To ensure that the public continues to trust in real estate brokerage’s regulatory framework, these perceptions must be changed,” the report says.
Self-regulation, as in the case of the OACIQ, has two advantages, according to the report: that it is self funded and the specialized skills of industry professionals are put to use. But there is often criticism of self-regulation, in part because of an appearance of conflict of interest, the report states, listing options to reduce or terminate industry control over the regulatory body, or have it run by government appointees.
Nadeau refutes the suggestion that the OACIQ is too close to the brokers.
“Why would the government want to pay to grow the governmental machine?” he asked.
Asked for its reaction to the government report, a spokesman for DuProprio responded by email, saying: “As to not harm the initiative undertaken by the ministry, we prefer not to add anything for the moment.”