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Apparently jolted by the sub-prime mortgage crisis that is shaking up the U.S. economy — especially in real estate — Quebec's Liberal government has passed new legislation to regulate the province's real estate brokerage sector. "The sub-prime mortgage crisis in the United States has shown that buying a home can turn into a nightmare," Finance Minister Monique Jérôme-Forget said recently following passage of the Real Estate Brokerage Act, Bill 73.
New regulatory body
"The new legislation proves, once again, the government's firm determination to ensure that Quebecers are adequately protected and that the real estate brokerage industry is equipped with a modern regulatory structure that fosters its vitality," she added. According to Jérôme-Forget, consumers will be the biggest winners as a result of the new legislation. She said the exclusive mission of the Organisme d'autoréglementation du courtage immobilier du Québec, as the new regulatory body is to be known, will be to protect the public.
Mediation to be available
She maintains the agency will be better equipped to pass more effective regulations and enforce the law. "Moreover, consumers will be able to turn for assistance to real estate brokers who are more aware of their responsibilities," said the minister. In addition to offering assistance, the organization created by the new law will be able to act as a conciliator-mediator and will have the power to ask for certain injunctions. Franchisers will be subject to the same rules regarding advertising as brokers and agencies.
Agencies will have to ensure that their brokers, senior management and employees comply with the law. "This new law modernizes the regulatory structure for real estate brokerage," added Jérôme-Forget. In addition to improving consumer protection, she said it will streamline regulation for both real estate brokers and the self-regulating organization that will be overseeing the real estate sector.
Sub-prime crisis
The subprime mortgage crisis is an ongoing economic problem in the U.S. that is leading to mortgage foreclosures. Subprime lending is lending done at a rate higher than at the prime rate. The sub-prime crisis began with the bursting of the US housing bubble and other adjustable rate mortgages made to higher-risk borrowers with lower income or lesser credit history than "prime" borrowers.
A housing bubble is characterized by rapid increases in the valuations of real property until unsustainable levels are reached relative to affordability. During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure, up 79% from 2006. Major banks and other financial institutions around the world have reported losses of approximately U.S. $379 billion as of May 21, 2008
ACAIQ to be replaced
In the new real estate legislation, the Organisme d'autoréglementation du courtage immobilier du Québec will be replacing the Association des courtiers et agents immobiliers du Québec, which has overseen the sector since the early 1990s. The ACAIQ, which lobbied the government for more than decade to pass the new legislation, is pleased with the changes. Robert Nadeau, the ACAIQ's president, noted in the organization's most recent annual report that Bill 73 "contains a great majority of the changes requested by the ACAIQ, and it recognizes the principle of a single professional title, i.e. real estate broker."
Brokers' permits
According to Nadeau, the new law makes it mandatory that real estate brokerage acts are done by persons, and that only they will be allowed to hold a broker's permit. Permits will also be replacing brokerage certificates. The real estate broker will be able to work within a real estate agency, which itself will be the holder of a permit issued by the regulatory body. The real estate broker and the agency will have joint responsibility to the public. Nadeau noted that Bill 73 also creates a separate permit for mortgage brokerage.
Quebec second jurisdiction
Quebec becomes the second jurisdiction in North America, after Colorado, to establish the principle of a single permit category. "The desire to live in a healthy home and to respect the environment are considerations that increasingly come into play in the sale or purchase of a property," Nadeau said about the changing social conditions real estate brokers are facing. "The public is now paying special attention to issues such as pyrite, iron ochre, blue algae, radon, mould, eletromagnetic fields, energy costs and contaminations of all kinds. Brokers and agents must pay attention as well."
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