In March 2020, the Ontario government passed the Trust in Real Estate Services Act (also referred to as “TRESA”). The Trust in Real Estate Services Act sets out a phased approach to implement changes to make Ontario’s real estate industry stronger, more transparent, and better protect consumers.
A previous Bader Law blog provides the background to the Trust in Real Estate Services Act and the governing legislation, the Real Estate and Business Brokers Act (also called the “REBBA”), that it amends. It also provides an overview of the three-phase approach to implementing the Trust in Real Estate Services Act, including Phase 1, which was completed in October 2020. Phase 1 focused on permitting salespersons and brokers to incorporate and be paid through personal real estate corporations and also to prescribe more recognizable terms such as “real estate agent” and “REALTOR” to describe themselves in advertising and marketing.
This blog will focus on Phase 2 of the implementation of the Trust in Real Estate Services Act, which includes a new code of ethics, open bidding, and new powers for the Real Estate Council of Ontario (“RECO”), which administers and enforces the Act. These changes will all come into force in Ontario on April 1, 2023.
As many changes are happening in 2023 as part of the implementation of Phase 2, this is part one of a two-part series which will explain these changes. This blog post will discuss the renaming of the Real Estate and Business Brokers Act, the new Code of Ethics for registrants under the Act, and enhanced disclosure during real estate transactions.
The Legal Regime for Real Estate Professionals in Ontario
The Real Estate and Business Brokers Act governs real estate brokers, brokerages, and real estate salespeople in Ontario. It is administered and enforced by the Real Estate Council of Ontario (“RECO”). RECO is also tasked with protecting the public interest and providing educational resources to the public and real estate professionals.
Renaming of the Real Estate and Business Brokers Act
As of April 1, 2023, the Real Estate and Business Brokers Act will be renamed the Trust in Real Estate Services Act.
New Code of Ethics
A new Code of Ethics, contained in Ontario Regulation 365/22, will come into effect on April 1, 2023. This will replace the current Code of Ethics found in Ontario Regulation 580/05. The Ontario Government wrote that the current Code would be confusing due to its mix of ethical duties (such as honesty) with technical or procedural obligations (such as details to be included in agreements). Many of the more technical requirements of the current Code have been transferred to other regulations.
The Code of Ethics applies to “registrants” under the Real Estate and Business Brokers Act. A “registrant” is a brokerage registered under the Act or a broker or salesperson who is registered under the Act.
The Code of Ethics regulation provides for the following primary matters, related to integrity, competence, and conflicts of interest:
- All registrants have an obligation to act with courtesy, honesty, good faith, and integrity towards all people that the registrant deals with in the course of their business;
- All registrants will refrain from any disgraceful, dishonourable, or unprofessional conduct;
- No registrant shall advise or knowingly assist another person to contravene the Trust in Real Estate Services Act or any other law that is applicable to real estate or relevant to the registrant’s business;
- No registrant shall engage in or be a party to fraud;
- All registrants shall make their best efforts to ensure that any representations are accurate and not misleading, nor be a party to misrepresentation; and
- No registrant shall contravene the Human Rights Code, nor engage in conduct that is intimidating, coercive, or abusive.
- Registrants are obligated to promote and protect the best interests of their clients. If a registrant believes that a client’s ability to understand information or make decisions could be impaired, the registrant will make reasonable efforts to ensure that the client understands the information and appreciates the consequences;
- Registrants will provide conscientious and responsive service and demonstrate reasonable knowledge, skill, judgment, and competence;
- Registrants shall not provide services, opinions, or advice to self-represented parties with respect to a trade in real estate;
- Registrants will advise an individual to obtain services from someone else if the registrant cannot provide the services competently or is not legally authorized to provide the circumstances; and
- Registrants shall keep all confidential information about their client unless authorized or required by law to disclose it, or with the client’s consent.
Conflicts of Interest
- Registrants shall not provide any services, or continue to provide services, to a client where the interests of the registrant conflict or may conflict with those of the client. There is an exception to this when all of the following as been met:
- The registrant has disclosed the conflict of interest or potential conflict of interest;
- The registrant has advised the client to seek independent legal advice about the conflict/potential conflict;
- The registrant has taken all reasonable steps to ensure the client has demonstrated a reasonable understanding of the conflict/ potential conflict; and
- Obtained consent in writing from the client to provide services despite the conflict/ potential conflict.
Enhanced disclosure to assist real estate purchasers make informed decisions
Beginning on April 1, 2023, new requirements apply to “disclosures” in real estate transactions. “Disclosures” refer to the process of the seller answering written questions about the property in question. Disclosures must be in plain language and presented in a manner that brings to the recipient’s attention the information being conveyed. These new requirements are found in amendments to Ontario Regulation 467/05.
Mississauga Real Estate Lawyers Help Individuals with Residential and Corporate Real Estate Transactions
Real estate transactions are often one of the largest financial transactions any individual or company will engage in. Therefore, retaining a law firm with the requisite experience, skills and resources is important to ensure your interests are protected and the transaction closes without issue.
At Bader Law, our trusted real estate lawyers represent both individual and corporate buyers and sellers in residential and commercial real estate transactions. We work with clients located in Mississauga and throughout the Greater Toronto Area. Our real estate team will advise you on your options, help secure your interests, and protect your financial investments. To speak with one of our lawyers regarding your upcoming real estate transaction, reach out to us online or call us at (289) 652-9092.