On April 1, 2023, changes to Ontario’s laws governing real estate professionals will come into effect. Amendments include renaming the current legislation, a new code of ethics for real estate professionals, and enhanced disclosure requirements.
We previously wrote about the proposed changes and stakeholder feedback process. Now, here’s what you need to know about the changes to the Real Estate and Business Brokers Act, 2002, SO 2002, c 30, Sch 3 (“REBBA”) that will come into effect next year.
The Real Estate and Business Brokers Act, commonly known as REBBA, governs real estate salespersons, brokers, and brokerages in Ontario. In addition to REBBA, real estate professionals are also governed by a Code of Ethics in Ontario.
The Real Estate Council of Ontario (RECO) is responsible for enforcing REBBA on behalf of the Ontario government. They regulate all real estate professionals in the province, protect the public interest, and provide educational resources for real estate professionals and consumers.
Key Upcoming Changes
Several key changes will occur on April 1, 2023, including::
REBBA Will Be Renamed
The title of the legislation will be renamed the Trust in Real Estate Services Act, 2002.
New Code of Ethics
The current code of ethics will be replaced with a new, principle-based code of ethics applying to all real estate professionals governed by RECO.
Open Offers Will Be Allowed
Currently, if a buyer is looking to make an offer on a property, they are generally unaware of the nature of the competing offers. Real estate professionals are required to disclose the number of offers, but not the amount or qualifications relating to the offers, leading to a tricky situation for potential buyers..
Under the new process, real estate professionals will have the option to participate in an “open offer” process, meaning that they will be able to disclose details regarding the different offers received on a property.
Disclosure Will Be Enhanced
When buying or selling a property, you will often come across “disclosures”, where the seller answers written questions about the condition of the property they are selling. The amendments to REBBA will require the following:
- Disclosures will be written in plain language; and
- Clarity surrounding a brokerage’s obligation to disclose material facts regarding a property to buyers.
More Clarity for Consumers
Consumers will get more information to help them make informed decisions about working with real estate professionals, including the following:
- The representation options available to them and the implications of different representation types;
- The risks involved in self-representation; and
- A guide published by RECO outlining key information that all consumers should know about working with real estate professionals.
Broadening Regulatory Powers
These changes will also broaden RECO’s regulatory powers, most notably:
- RECO will have more power to limit, suspend, or revoke the registration of real estate professionals, and appeals of RECO decisions on licensing will be referred to the License Appeal Tribunal rather than RECO’s appeals committee;
- RECO will have the authority to refer a registrant to a discipline committee hearing regardless of whether another real estate professional or consumer has submitted a complaint.
- RECO can require higher levels of reporting from real estate professionals (e.g., specific transactional data);
- RECO will have greater authority over certain regulatory requirements, such as advertising, record-keeping, and notice requirements; and
- RECO will publish more information about disciplinary action against real estate professionals. This information will now be available online, providing more transparency for consumers.
What Impact Will These Changes Have on Consumers?
These changes are designed to increase transparency in Ontario’s real estate market. Not only will they provide increased transparency regarding the regulation of real estate professionals, but they are also designed to create more transparency in the buying and selling process.
While the full impact of these changes is yet to be seen, there are plenty of tips consumers can follow now to minimize their risk and make purchases with confidence.
Tips for Ontario Real Estate Buyers
Buying or selling a home is a major financial decision and it is important to do your research and approach the process with confidence. Important takeaways for buyers to consider during their property search are as follows:
Make a budget: Before you start shopping, ensure you have an understanding of your budget. Remember that your budget extends far beyond the purchase price of the property. You’ll want to consider both the up-front costs, including the purchase price, home inspection, taxes, insurance, and legal fees, and the ongoing costs, such as mortgage payments, property taxes, strata fees, and other ongoing costs as applicable. While it’s easy to get caught up in a hot market, having a strong budget not only helps narrow down your search but can help you pull together offers quickly if you end up dealing with competing bids.
Ask questions: Don’t be afraid to ask questions. When buying real estate, it’s critical to avoid making assumptions. If, for example, you aren’t sure whether the washer and dryer in the seller’s garage are included in the sale, or whether the seller obtained the proper permits for a DIY renovation, ask them!
Document, document, document: Be sure to document as much information as possible about the property as it is critical to be as specific as possible when putting in your offer. If the seller’s realtor tells you that the washer and the dryer in the garage are included in the sale, make sure that your offer and any contract you sign reflects this.
Understand what you’re signing: Whether you’re signing a representation agreement with a real estate professional or putting an offer in on a property, it’s critical to understand what you’re signing. As we’ve seen all too often, real estate disputes can escalate over contract terms. Don’t be afraid to ask for clarification or contact a real estate lawyer if you need help.
Contact the Real Estate Lawyers at Campbells LLP in Oakville for Assistance with Buying and Selling Property
At Campbells LLP, our experienced team of real estate lawyers will continue to monitor for any legislative changes to TRESA and REBBA and how they may impact the responsibilities of buyers, sellers, and real estate professionals. Our team provides a wide range of legal services to meet your real estate law needs, including assistance with buying and selling properties, mortgage financing, and real estate litigation. To speak with one of our lawyers, contact us online or call us at 905-828-2247.