To modernize and strengthen the rules for buying or selling a home in today’s growing real estate market, the Ontario government introduced the Trust in Real Estate Services Act, 2020 (TRESA), which received Royal Assent on March 4, 2020. TRESA amends the Real Estate and Business Brokers Act, 2002 (REBBA), which governs Ontario’s real estate brokerages, brokers, and salespersons (registrants).
The Ministry of Government and Consumer Services has taken a phased approach to develop proposed regulations to bring the legislation into force.
Salespersons and Brokers Allowed to Incorporate
In the first phase, regulations were made to allow registered salespersons and brokers to incorporate and be paid through a personal real estate corporation, as well as to allow registrants to use more recognizable terms, such as “real estate agent” and “REALTOR®”, to describe brokers and salespersons in advertisements. Phase one concluded in October 2020.
Additional Provisions of TRESA
Now that the first phase has been completed, The Ministry is now consulting on the second phase of draft regulations needed to bring additional provisions of TRESA into force.
New REBBA Code of Ethics Regulation
The Ministry first consulted publicly on a proposed update, principle-based Code of Ethics (the “Code”) in the summer of 2021. Informed by this feedback, the Ministry is now offering further updates to the principle-based Code and is bringing them forward now in conjunction with related regulatory proposals.
The Ministry found that the Code can be confusing for both registrants and the general public because it mixes ethical requirements (e.g., honesty and integrity) with technical and procedural requirements (e.g., details about what must be included in written agreements).
The changes being proposed would streamline registrant obligations to enhance professionalism and consumer protection. The updated Code is principle-based, articulating requirements that registrants must comply with in relation to matters such as integrity, quality of service and conflicts of interest. The Ministry proposes moving technical and procedural requirements in the current Code will be moved to other regulations under REBBA.
Changes to the Offer Process
The current Code requires a real estate brokerage representing a seller to disclose the number of competing offers to every person who makes a written offer. Still, it prohibits the brokerage from disclosing the substance of the offers.
The Ministry is proposing changes to give buyers and sellers more choice in the real estate trade process by allowing a registrant to conduct an open offer process and disclose the details of competing offers at the seller’s direction. Prospective buyers would have the choice of whether to participate in this process.
If approved, the changes would:
- Remove the regulatory provision concerning competing offers from the Code
- Add a provision addressing competing offers to the General regulation that would:
- Permit a brokerage representing a seller to disclose information about the substance of competing offers (e.g., offer price, closing date) to the other persons making offers if the seller directs the brokerage to do so
- Stipulate that no personal information may be disclosed or any other information that would identify the person making the offer.
Information and Disclosure Obligations
The Ministry proposes changes to improve the information registrants must provide to buyers, sellers, and others providing real estate services. This is intended to help the public understand their choices for engaging or interacting with a registrant and the different obligations registrants have under the various forms of engagement or interaction.
Real Estate Council of Ontario Powers and Tools
The Ministry is proposing changes to help the Real Estate Council of Ontario (“RECO”) operate more efficiently and focus its compliance and enforcement efforts where they are needed and most effective. These proposed regulatory changes would include:
- Updating the rules about the information RECO’s Registrar must make publicly available
- Specifying the purposes for which the Registrar can require registrants to provide the Registrar with transactional data and related information
- Providing the Registrar with additional authority over administrative matters related to certain advertising, record-keeping and notice requirements
New Discipline Committee Regulation
The Ministry is proposing to create a new regulation dealing with the rules and procedures of the Discipline Committee, incorporating the relevant provisions currently found in the Code and General Regulation.
Under s. 5 of REBBA, an auctioneer can be exempt from the requirement to register with RECO. The Ministry is proposing regulation changes to add a condition to the exemption for auctioneers. The draft regulation proposes that as a condition to qualify for the exemption, an auctioneer must have no duties other than receiving, managing, and recording competing bids and accepting the highest bid as part of an auction bidding process.
Timeline for Phase Two Implementation
Stakeholders are invited to submit comments by responding to the government’s posting or by sending an email to firstname.lastname@example.org no later than January 24, 2022. The Ministry is proposing the Phase 2 regulations, if approved, would come into force on September 1, 2022. The Ministry is also proposing to proclaim certain provisions of TRESA.
Administrative Penalty Regime
For Phase 3, the Ministry intends to set out the details of the administrative penalty regime enabled through TRESA and consider further areas of regulatory reform. This may include the introduction of certification programs or changes and updates to the registration process.
Contact Oakville Real Estate Lawyers for Assistance in Real Estate Matters
At Campbells LLP our experienced team of real estate lawyers will continue to monitor TRESA and the government’s phased approach to its implementation. We provide a wide range of services related to residential real estate and can assist with the purchase and sale of your home under this new legislative regime. To speak with a lawyer about your real estate law needs, contact us online or at 905-828-2247 to schedule a consultation.