How to buy a real estate brokerage in New Brunswick: licences, ownership rules and what transfers

In New Brunswick the licence sits with the agent, the legal entity running the brokerage, so a purchase turns on who that entity will be after closing. The Financial and Consumer Services Commission of New Brunswick (FCNB) says the real estate industry is co-regulated by the Commission, which administers the Real Estate Agents Act, and by the New Brunswick Real Estate Association, which administers the New Brunswick Real Estate Association Act. The Act speaks of a Director who issues licences. The sources read for this page do not say what happens to an agent’s licence when the business is sold, so put that question to the Director. For the general sequence, see how to buy a business in Canada.

Who regulates a brokerage in New Brunswick

FCNB says the Real Estate Agents Act gives the Commission authority to investigate certain complaints and to order financial audits when necessary. The Association is the co-regulator under its own Act. Because two bodies are involved, ask the seller for any complaint or audit history with the Commission and for any correspondence with the Association. Under section 2 of the Act, no one may trade or hold themselves out as trading in real estate as an agent, a manager of an agent or a salesperson of an agent without the matching valid and subsisting licence.

Whose licence it is

FCNB says an agent’s licence is issued to the corporate body, partnership or individual legally responsible for contracts, financial accountability, advertising and the activities of each of its salespeople. Section 4 of the Act lists the conditions for issuing one. The agent must meet the qualification requirements in the regulations (for a corporate agent, subsection 4(2) applies them to its manager, or to the manager’s nominee if the manager is a corporation), file a bond payable to the Commission, submit to the jurisdiction of the province’s courts with an address for legal service, and maintain a permanent office in the province. If the agent is an individual, the agent must be a citizen of Canada or a permanent resident. FCNB says licences are valid for 12 months.

Offices and managers

Under section 5, an agent who trades in real estate from more than one place at which the public is invited to deal must be licensed for each place. One place is designated the main office and the rest are branch offices. FCNB says the Act requires a licensed manager for each office location. Section 7 sets when an office must be supervised by a manager, and section 8 limits a manager to one office and one agent, subject to exceptions the Director may allow. Section 6 makes a manager’s licence valid only while the manager is employed by and representing the agent that made the declaration filed with the Director, and ending that employment cancels the licence. Ask which managers the buyer’s entity would need to replace.

Salespeople and notices to the Director

FCNB says each salesperson representing the agency must hold a licence, and subsection 9(9) of General Regulation 85-24 says a salesperson’s licence shall be inscribed with the name of the agent employing the salesperson. Section 9 of the Act makes a salesperson’s licence valid only while the salesperson is employed by and representing the agent that made the declaration, and ending that employment cancels it. FCNB also says salesperson and manager licences expire on the same date as the licence of the agent they work for. If a different entity becomes the agent, ask how each salesperson’s licence will be re-issued. Section 15 requires an agent to notify the Director without delay in writing of several events, including a change in officials or, for a partnership, a change in the partners. The Act’s definition of official includes the president, the directors and the general manager.

Death or incapacity of an individual agent

Section 16 covers the case where a licensed agent who is an individual dies or becomes incapacitated. The Director may issue a temporary agent’s licence to a person who, in the Director’s opinion, is qualified to act as an agent. It runs for no more than six months and lets the holder carry on the business of an agent only in relation to, in the Act’s words, “the trading in real estate of the deceased or incapacitated agent”. A salesperson employed by that agent is deemed licensed with the temporary agent for the same period. By its terms it is a stopgap, so ask the seller what succession plan, if any, is in place.

Trust accounts and records

The Act has its own trust-account provisions, headed Trust account, Payments into trust account, Payments out of trust account and Agent as trustee in respect of deposit. They are where a buyer should look for how deposits are held and paid out. Read them with your lawyer, and ask the seller for the trust ledgers and reconciliations before closing. Since FCNB can order financial audits, ask whether any has been ordered.

• The agent’s licence, showing the licence holder, the main office and each branch office, with a licence for each place.
• Each manager’s licence and the agent’s declaration that the manager acts for that agent.
• The list of salespeople with licence dates, matched to the agent’s licence expiry.
• Notices given to the Director about changes in officials or partners, and any complaint or audit correspondence with FCNB.
• Trust ledgers and reconciliations, plus the brokerage’s FINTRAC anti-money-laundering records.