Real Estate Talk:
The broker’s protection

The broker’s protection after the expiration of the contract and why

By Joseph Marovitch

April 24, 2025

When a real estate broker signs an agreement to sell a property for a client, the broker proceeds to market the property by preparing a listing description of the property for the public to view, preparing and placing ads in newspapers and magazine publications, and online ads in social media. The broker arranges visits to the property, open houses, flyers, mailings and more, to create interest in the property. In a targeted campaign with proper pricing, dependent on the condition of the property and the market conditions, the property will sell. However, there are situations where the seller wants a price higher than the market value, or the market is fluctuating or in a recessive state, and therefore, the property may not sell by the expiration of the mandate.

In such a situation, in which the mandate has expired but a buyer, who visited the property during the broker’s mandate, decides to make an offer after the mandate, the broker’s commission is protected up to 180 days after the contract expiration. The reason for this is that the broker, during their mandate, is the one who created the campaign, which generated the interest for the buyer in question and is therefore the cause of the purchase. Another reason for the 180-day commission protection is so that a buyer and seller do not agree to negotiate a sale after the contract expires to avoid paying a commission.

In such a situation, in which the mandate has expired but a buyer, who visited the property during the broker’s mandate, decides to make an offer after the mandate, the broker’s commission is protected up to 180 days after the contract expiration.

The first reason is a matter of good faith and fairness. The second reason can be avoided altogether by proper vetting by both the seller and broker. An ethical agreement consists of several parts, including but not limited to the written agreement agreed to by both parties, trust, and chemistry. Trust and chemistry are paramount for parties in an agreement to work together. If there is no trust or chemistry, the written agreement is of little value and more of a hindrance.

Before signing a brokerage contract, it is wise to meet with a broker to determine whether there is integrity, knowledge and experience evident, as these attributes determine chemistry and trust. At the same time, the broker must determine, in a meeting, if there is integrity and good faith on the part of the buyer or seller. This precaution is taken so that all parties are comfortable and protected. If it is determined by either party that these attributes are not evident, all parties have the right not to sign an agreement.

There is an exception to the 180-day broker’s protection clause. If, upon the expiration of the last broker’s contract, the seller retains the service of another broker and signs a new agreement, then the 180-protection clause does not apply.

The broker’s protection clause is in the brokerage contract, prepared by the OACIQ (Organisme d’autoréglementation du courtage immobilier du Québec), in clause 7.1.3 following clause 7-Brokers’ remuneration, as stated:

Clause 7.1.3 of the Exclusive brokerage contract:
3. where a sale takes place within 180 days following the end date or termination date of this contract with a person who was interested in the IMMOVABLE during the term of this contract, unless, during this period, the SELLER concluded in good faith with another agency or another broker a contract stipulated to be exclusive for the sale of the IMMOVABLE; or 4. where the SELLER voluntarily prevents the performance of this contract.

For the 180-day protection clause to be implemented, the following conditions must be evident:

1. The sale must take place within 180 days of the expiration of the brokerage contract.
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2. The sale must be to a buyer who spoke with the broker and visited the premises within the mandate.
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3. The seller must not have signed another brokerage contract with another broker, excluding the buyer in question, immediately following the expiration of the last broker’s contract. This would appear as bad faith and the seller attempting to avoid commission payment.

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State of the market

This past Wednesday, the Bank of Canada did not decrease the bank rate of 4.95% for the first time in the past eight meetings, in consideration of rising inflation and anticipation of fallout from tariffs. However, sellers are waiting for further rate drops so their property values will rise. Lower rates increase values by increasing demand.

However, there is much uncertainty as to which direction rates will move. Tariffs on steel and aluminum are increasing developers’ costs and reducing new construction at a time when Canada requires many more homes to meet demand. With increased expenses, the price of new construction rises, making affordable housing scarce. We are in a tug of war between unaffordable housing and rising inflation, which can decrease demand and lower property values.

The anticipation of further tariffs can be worse than the actual application of tariffs because it leaves consumers in limbo as to whether to buy or sell.

‘No matter what the scenario, there are strategies to buy, sell and invest with a positive outcome. There are opportunities as well in all markets if you know where to find them and how to manage the outcome.’

If further tariffs are applied, then we are looking at increased inflation, increased costs on goods and services, higher interest rates, lower household income, less demand and unaffordable property values. In this scenario, it is better to lock in a current interest rate and buy now, from a buyer’s perspective.

If tariffs are not applied, then inflation decreases, costs are lower, rates decrease, and property values rise, but become affordable, causing higher household income and increased demand. In this scenario, it would be better to buy later.

It is a gamble to buy or sell now or later. However, risk can be minimized by buying now with a lower interest rate. On the other hand, the risk may rise, but the return could be higher if the gamble pays off and rates decrease further.

No one can predict for now where the economy is going therefore, the decision must be made depending on one’s financial situation and requirement to purchase property.

No matter what the scenario, there are strategies to buy, sell and invest with a positive outcome. There are opportunities as well in all markets if you know where to find them and how to manage the outcome.

Have a great week and remain positive.

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