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. 

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Designated Agency FAQs

Adding a Second Buyer to an APS

STEP ONE: If not already obtained, any additional documents required for buyers such as: Working with the Real Estate Industry form, Buyer (Designated) Brokerage Agreement, Customer Status Acknowledgements, etc. Subscribe Share Past Issues Translate would need to be completed with the new buyer.

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'

Read the full approved policy on 'Coming Soon' advertising. The approved policy for 'Coming Soon' advertising would be applicable to any advertisement for a property where:
  • the property is not already subject to an effective brokerage agreement;
  • the property is not entered into the MLS® system;
  • the property is not available for general showings or open houses;
  • the property is not otherwise given full exposure to the market; and
  • the licensee anticipates a property will be listed for sale and advertises it on a limited basis as ‘coming soon’.
  • Any agreement to offer ‘Coming Soon’ advertising does not constitute a brokerage agreement or service agreement.

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:
  • the name of the brokerage;
  • the name of the seller(s)
  • the fee charged, if applicable; and
  • an expiry date.
  • The approved policy states that offering or agreeing to offer ‘Coming Soon’ advertising for a seller must be in writing, but does not obligate the seller to enter into a brokerage agreement or a service agreement with the brokerage.

All ‘Coming Soon’ advertisements, whether it is a social media post, a lawn sign or an online ad, must include the following:
  • the full brokerage name; and
  • the following qualifying statement identifying that the property is not currently on the market: “This is not an offering for sale”.

Advertising Bedrooms

To be considered a bedroom, the space must meet building code standards, which include an exit door, a sprinkler system, or a window large enough to permit egress to the outside. If there is any debate over whether a room qualifies as a bedroom, contact the local municipality to find out.

Calculating the Number of Pages in an Agreement of Purchase and Sale

This number of pages line must amount to only the pages forming and attached to the agreement at the time it was written, which includes Part I, Part II and any attached schedules or addendums.

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

Details must be documented clearly when a cash back to a buyer or an inducement is offered by the brokerage(s) to complete a transaction. When documenting cash backs, make sure you record not only the amount of the cash back, but also how and when the cash back will be provided to the buyer.

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

Competing Offers

Handeling competing offers is different depention on whether you are representing the seller or the buyer. For indepth information, read our full article.

Completing the Brokerage Representative line

The Signature of Brokerage Representative line at the end of brokerage and service aggrements is to be signed by the licensee working with the consumer; a typed in name is not sufficient.

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

The remuneration clause has been modified to suit a variety of business models. No matter whether a brokerage charges a flat fee, a percentage, a range, or a combination of any of those options, two blank lines have been used for flexibility. It is important to note, however, that licensees’ fiduciary duties require that the amount the brokerage is to be paid be disclosed to the buyer.

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…

  • independently trade or attempt to trade in real estate (see definition of trading);
  • review, interpret, discuss or explain listings, offers, contracts, service agreements or brokerage agreements with anyone outside the employ of the brokerage, including clients and customers of the brokerage;
  • present and sign (outside of witnessing) any documents relating to a real estate transaction including service agreements and brokerage agreements on behalf of the brokerage;
  • assist a consumer to negotiate any terms of a real estate transaction; or
  • act in an agency capacity on behalf of a consumer.

In working with real estate licensees…

  • host open houses on their own (all consumer inquiries must be directed to the licensee);
  • attend property inspections in the place of a real estate licensee;
  • advertise in conjunction with a real estate licensee without disclosing unlicensed status; or
  • relay any information to clients or customers of the brokerage that could be considered a comparative market analysis (only factual, advertised listing information can be provided to consumers on a specific property).

Extending a Contract

If a date in a contract needs to be extended, whether it is financing, inspection, duration, etc. the extension must be done, in writing, before the original deadline passes.

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

Compensation must flow from the brokerage to the individual licensees or the individual approved sales corporations. Remuneration cannot be paid to a member of the team and then distributed to the team members because all service contracts are between the consumer and the brokerage.

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.

Stigmatized Properties

When buying real estate, the onus is on the buyer to ask questions if something is specifically important to them rather than relying on a licensee to anticipate their needs.

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

Real estate contracts remain with the brokerage unless the broker and clients of the brokerage (i.e. buyer/seller) agree in writing to change the representation to the brokerage you end up transferring your licence too. It’s important to note that you cannot interfere in real estate contracts your clients signed with the brokerage.

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.

Trust Deposits

A trust fund deposit is performed when a consumer provides a financial deposit to the brokerage and it is placed into the brokerage’s trust account. Trust deposits must only be placed in the brokerage’s trust account according to the terms of the real estate agreement (i.e. trust funds must come directly from the buyer and placed into the brokerage trust account with the exception of a cash trust deposit).The brokerage has multiple options regarding how they can deposit trust funds into the brokerage's trust account, including:
  • personal cheque
  • cash
  • bank draft
  • email money transfer (EMT)
  • wire transfer
Cash deposits have specific rules around how they are maintained, as outlined in Bylaw 638, which states that when a cash deposit it is to be deposited into the brokerage’s trust account whether or not the buyer’s offer has been accepted. If the offer is accepted, the buyer’s brokerage transfers the deposit to the seller’s brokerage trust account according to the terms of the accepted offer. If negotiations do not result in an accepted offer, the buyer’s brokerage returns the cash deposit to the buyer.

See our full article on Deposits and Disbursements here

Trust Disbursements

A trust disbursement is the action of removing trust money from the trust account. The broker may only disburse funds from the trust account by trust cheque or an Electronic Funds Transfer (EFT).
Cheque disbursements
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.
EFT disbursements
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:
  • the date of the transfer;
  • the account from which the funds are being transferred;
  • the account to which the money is being transferred;
  • a confirmation number produced by the financial institution that corresponds to the subsequent bank statement; and
  • information sufficient to identify the trade in real estate (trade address, buyer’s name and trade number, if applicable).
Read our full article on trust deposits and disbursements here.

Using Electronic Signatures

Software to secure an electronic signature may be used on any service contracts or purchase agreements; however, the Commission does not promote, prefer or otherwise endorse a particular brand of electronic signature software. The broker is directly responsible to verify that any electronic signature service used to produce signatures on agreements, in the eyes of the law, creates legally binding service agreements and legally binding agreements of purchase and sale for real estate. The Commission recommends that brokers seek independent legal advice as part of this verification process.

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

If the seller is requesting trust funds that are in excess of the remuneration owed be removed from the brokerage’s trust account prior to closing, the brokerage holding the funds in trust must have both parties’ (i.e. both the buyer(s) and seller(s)) signed consent in writing prior to closing. An amendment to the Agreement of Purchase and Sale or another written form that gives clear instruction from other parties will satisfy this requirement.

The newly republished Clause Book includes a clause that can be used in these circumstances (page 6).

Keep in mind that it is the Commission's position that an email does not constitute ‘in writing’ and is not sufficient to satisfy the requirement as there are no bona fide signatures captured. For more information on what ‘in writing’ means, see our article on the topic.

The Nova Scotia Real Estate
Commission
is the regulator of the
Nova Scotia real estate industry.

Contact Us

Nova Scotia Real Estate Commission

601-1595 Bedford Highway
Bedford, NS
B4A 3Y4

p: 1.902.468.3511 or
1.800.390.1015

f:  1.902.468.1016 or
1.800.390.1016

e: For licensing information
licensing@nsrec.ns.ca
For complaints
compliance@nsrec.ns.ca