Real Estate 101

What Are the Risks of a Real Estate Transaction?

By Georges Matar · October 21, 2026 · 9 min read

Between the promise to purchase and the handing over of the keys, a deposit, a loan, a title and the sale price pass between the buyer, the seller, the broker, the lender and the notary. Each hand-off carries a specific risk, and most of these risks already have a protection written into a law or a regulation, with a ceiling and a deadline. These rules are provincial or federal, so they are the same in Laval and in Montreal. Here is each risk, the tool that answers it, who offers it, and what it does not cover.

The risks of a real estate transaction, step by step

Risk	Protection	Who offers it
Loan refused	Financing condition	OACIQ promise to purchase, section 6
A party refuses to sign	Deposit, judgment in lieu of title	Code civil, articles 1711 and 1712
Hidden defect	Legal warranty, inspection	The seller, the inspector
Defective title, servitude	Title examination, certificate of location, title insurance	Notary, land surveyor, insurer
Identity theft	Identity verification	Broker and notary
Deposit misappropriated	Trust account, fund of up to $100,000	Broker, OACIQ
Sale price misappropriated	Trust account, fund of up to $200,000	Notary, Chambre des notaires
A professional’s error	Mandatory liability insurance	FARCIQ, the Chambre des notaires’ insurance fund, the inspector’s insurer

The financial risk: the financing condition

For the buyer, the risk is committing without a loan. The protection is section 6 of the OACIQ’s mandatory promise to purchase forms. According to the OACIQ, the buyer’s broker enters the loan amount there, along with the maximum interest rate, the amortization and the term, and never writes “current rate.” A pre-approval does not prove a lender’s commitment, and the time allowed to obtain the loan should generally be at least 14 calendar days. The limits of a pre-approval are covered in the mistakes of mortgage pre-approval.

For the seller, the risk is a buyer who does not close. If the lender’s commitment does not arrive, clause 6.3 gives the seller five days to act. The OACIQ specifies that this deadline is strict: if the seller does not act, the promise is automatically cancelled. If a party then refuses to sign, article 1711 of the Code civil du Québec (Civil Code of Quebec) presumes that any amount paid on the occasion of the promise is a deposit on the price, unless otherwise stipulated, and article 1712 makes it possible to obtain a judgment in lieu of title. The choice of recourse is made with a lawyer.

The building: inspection and legal warranty

Article 1726 requires the seller to warrant the property against hidden defects, but not against a defect the buyer knew about, nor against an apparent defect, one that a prudent and diligent buyer could have noticed on their own. The inspection therefore serves to find, before signing, whatever can be found, rather than counting on a recourse afterward. Article 1732 allows this warranty to be excluded entirely, but the seller cannot escape liability for their own personal acts: see sale without legal warranty in Quebec.

A private warranty can be added. RE/MAX Québec, the banner I work under, offers Integri-T with GBQ, a surety company, not an insurer. This paid program provides protection of up to $50,000 against hidden defects in the main building, for 3 years after the deed of sale. It requires a recent pre-purchase inspection report and must be put in place before the notarial deed. Excluded, among other things, are outdoor features, normal wear and inadequate maintenance. A defect noted in the inspection report is no longer a hidden defect: the buyer knew about it when making the offer. A property sold without legal warranty is not eligible, and neither is a building left vacant, neglected or under repossession proceedings. The conditions are on the Integri-T page.

Title, compliance and fraud

The title examination. According to Éducaloi, the notary checks the deeds through which the property changed hands, to make sure it belongs to the seller and that the seller has the right to sell it. The same examination can reveal a neighbour’s right of way, or a seizure the government is about to carry out for the seller’s unpaid taxes.

The certificate of location answers what the deeds do not show: municipal by-laws, lot line, right of way, flood zone. Éducaloi considers it out of date after 10 years, or sooner, at the first change to the property, to the by-laws or to the lot number.

Title insurance compensates you if a problem related to your rights in the property comes up, for example if the municipality requires a garage to be moved, as Éducaloi illustrates. It excludes, among other things, fences, low walls, hedges and environmental rules: it complements the certificate without replacing it. The closing costs calculator gives it a line of its own, next to the notary and the inspection.

Identity theft. The Financial Consumer Agency of Canada describes title fraud: a fraudster steals the title, then sells the house or obtains a new mortgage, often after stealing someone’s identity. Two regulatory checks stand in the way. The broker verifies the identity of the party they represent, and that of the other parties who have no broker (section 29 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising). The notary, before receiving a notarial deed or disbursing funds, verifies the client’s identity with two documents from a reliable and independent source, one of them with a photo. FINTRAC also requires the broker to verify identity for certain transactions, to keep records and to report suspicious transactions.

A charge missing from the register. The legal hypothec of those who took part in work on the property exists without being published and subsists for 30 days after the work ends (articles 2726 and 2727). Recent renovations are therefore a question for the notary, covered in detail in seven failures that derail a transaction.

Money in transit: trust accounts and indemnity funds

With the broker. Any amount a broker receives that does not belong to them, such as the deposit, goes into a trust account (section 10 of the Real Estate Brokerage Act). If it is misappropriated, the Real Estate Indemnity Fund (FICI) can pay up to $100,000 per claim for an act committed since May 10, 2018. The claim is made in writing, with supporting evidence, within two years of becoming aware of the act, a deadline the committee can extend for a cause beyond the claimant’s control.

Check the licence beforehand. According to the OACIQ, a person without a licence who gets paid for a brokerage transaction is acting illegally, and the Fund then offers no recourse. The OACIQ’s register of licence holders confirms it in a single search.

With the notary. The notaries’ trust accounting regulation requires a general account opened in Quebec, made up of insured or guaranteed deposits, a receipt for every amount received and verification of the identity of whoever hands it over. Before closing, the notary checks that the amounts are sufficient and that the payments have cleared. The notary then holds the funds until the rights are registered with no prejudicial registration, and first pays for the cancellation of the charges the buyer is not taking over. Éducaloi sums up the effect: the seller cannot leave with the money without paying the debts tied to the property.

If the notary misappropriates the funds, the indemnity fund of the Chambre des notaires (Quebec’s order of notaries) can pay up to $200,000 per claim. When several people entrusted funds for the same service, that ceiling applies to all of them together, shared pro rata. The claim, written and sworn, must be filed within one year of becoming aware of the misappropriation.

A professional’s fault: mandatory insurance

The law separates two regimes, the OACIQ points out: the Indemnity Fund for fraud, fraudulent tactics and misappropriation, and liability insurance for faults, errors and omissions. An error on a listing sheet or a missed duty to advise therefore does not fall under the FICI, unless the error is intentional and made to deceive.

Professional	Mandatory insurance	Minimum coverage
Broker, agency	FARCIQ	Not published on the pages consulted
Notary	Fonds d’assurance de la Chambre des notaires	$1,000,000 per loss, $2,000,000 per period
Inspector certified by the RBQ	Errors and omissions, civil liability	$1,000,000 or $2,000,000 per claim, depending on the category

FARCIQ compensates the loss resulting from an unintentional fault, error or omission by a broker or an agency. The claimant must prove the fault, a determined and quantifiable financial loss, and the causal link. An ethics breach does not necessarily lead to compensation. The claim is sent in writing to the broker or the agency, with a copy to FARCIQ, which specifies that it cannot act as the claimant’s legal adviser since it insures the broker: that is a lawyer’s role.

The inspector can practise without a certificate from the Régie du bâtiment du Québec (RBQ, Quebec’s building board) until September 30, 2027, and the insurance in the table applies only to certificate holders. Ask for the certificate number and the proof of insurance before signing.

What the protections of a real estate transaction do not cover

A market downturn. None of the regimes described here addresses a price that was too high: each one requires fraud, a fault, a defect or a title defect.
Negligence, at the FICI. It requires an intentional act; an unintentional error falls under FARCIQ.
The unlicensed intermediary. The FICI protects only the clients of licence holders, and FARCIQ is the insurer of those licence holders.
Missing the deadline. Two years at the FICI, one year at the notaries’ indemnity fund, from the time you become aware of the act.
The sale without legal warranty. It sets aside the seller’s warranty, except for their personal acts, and closes off access to Integri-T.

Frequently asked questions

Is my deposit safe with the broker? The law requires the broker to place it in trust. If the broker misappropriates it, the FICI can pay up to $100,000 per claim, provided you claim in writing within two years. Check the broker’s licence in the OACIQ register first.

I think my broker made a mistake. Who do I write to? To the broker or their agency, in writing, with a copy to FARCIQ. You will have to prove the fault, the loss and the link between the two. If the act was intentional and meant to deceive you, the claim falls under the FICI instead. A lawyer will tell you which recourse applies.

Can a broker eliminate these risks? No. A broker has specific obligations: verifying identities, placing the deposit in trust, drafting the conditions of the promise. The rest is divided among the notary, the inspector, the insurers and the two funds, each with its own ceiling and deadline.

To go further, read the notary’s work, step by step and seven red flags that justify walking away from a property.

Want to know which protection applies at which stage of your transaction? Write to me. I will show you where each one comes in, and refer you to the notary or the lawyer for what falls to them. Service in French, English and Arabic.