Persons who refer a client to mortgage lender

Persons who refer a client to a lender may not be remunerated contingent on the making of a loan secured by immovable hypothec, except if they are covered by an exception and in a situation described in section 11.2 of the Distribution Act.

Effective May 1, 2020, real estate brokers will need a mortgage broker certificate issued under the Distribution Act in order to purse activities as mortgage brokers and, among other things, receive remuneration Under the Distribution Act,  the firm, independent representative or independent partnership receives the remuneration and then redistributes it to the representative. that is contingent on the making of a mortgage loan.

The Distribution Act stipulates that ‘’only the holder of a mortgage broker licence and persons benefitting from an exception may engage in a brokerage transaction relating to a loan secured by immovable hypothec for others and in return for remuneration that is contingent on the making of such a loan.”

Real estate brokers who do not hold a mortgage broker certificate will, however, still be able to refer clients directly to mortgage lenders and be remunerated by them provided the remuneration is not contingent on the making of a loan.

They will, for example, be able to be paid by way of an amount for each referral, a lump sum, an annual amount, and so forth.

Mortgage brokers may not confine their activities to client referrals.

Real estate agency-mortgage brokerage firms

Theoretically, as the regulations made under the Distribution Act currently stand and barring a change in this regard, there is nothing preventing a real estate agency from registering as a mortgage brokerage firm if it is a legal person.

In such a case, several rules must be followed, including ensuring that the information collected by mortgage brokers remains confidential. Such information must be recorded in the mortgage brokers’ client files and be inaccessible to persons not authorized to access it, including real estate brokers.

However, as part of regulatory development work to be carried out after May 1, 2020 pertaining to all clienteles regulated by the Distribution Act, the AMF will analyze the application of its multidisciplinarity rules and may seek comment on the changes to be made.

History

Until April 30, 2020, the mortgage brokerage sector will be regulated by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)  This link will open in a new window. As of May 1, 2020, mortgage brokerage will be a sector governed under the Act respecting the distribution of financial products and services (the "Distribution Act") and regulated by the AMF.

Therefore, as of May 1, 2020, two separate authorizations will be required to carry on mortgage brokerage and real estate brokerage activities: a mortgage broker certificate issued by the AMF and a real estate broker licence issued by the OACIQ.

Until April 30, 2020, real estate brokers are permitted to refer clients to mortgage lenders and to be remunerated by such lenders contingent on the making of a loan. In such cases, they must disclose to the client the existence of a referral agreement and the fact that they receive remuneration.