Ontario’s real estate industry is growing, developing, and adapting at an unprecedented pace. The rapid growth has led to calls for improvements in transparency and consumer protection.
The Ontario Government has taken action in response to some of the issues that the exponential growth has led to, and in March of 2020, the government’s Trust In Real Estate Services Act, 2020 (“TRESA 2020”) received Royal Assent. TRESA 2020 is intended to address the need for a stronger and more ethical business environment, to protect consumers when making their biggest purchase: real estate.
As a background: TRESA 2020 amends the Real Estate and Business Brokers Act, 2002 (“REBBA”), the legislation that governs real estate brokerages, brokers and salespersons (registrants) in Ontario. REBBA and its regulations are administered and enforced by the Real Estate Council of Ontario (“RECO”). RECO is a “not-for-profit corporation that is delegated by the provincial government to administer and enforce REBBA 2002 and associated regulations”.
The government has taken a phased approach to the process of developing proposed regulations to bring the related TRESA, 2020 legislative changes into force.
In Phase 1, salespersons and brokers were allowed to incorporate and be paid through a personal real estate corporation (PREC), and allowed them to use more recognisable terms, such as “real estate agent” and “REALTOR®,” to describe brokers and salespersons in advertisements. Phase 1 was completed in October of 2020.
Phase 2 began with a consultation on a draft Code of Ethics. With the benefit of industry and stakeholder input, the government has now prepared a revised draft Code of Ethics and has prepared several other draft regulations as part of Phase 2.
On December 10, 2021, the Ministry of Government and Consumer Services Branch of the Government of Ontario (“ the Ministry”) published for comment draft regulations that are needed to bring certain provisions of TRESA into force. In addition to the revised Draft Code of Ethics, the Ministry is also proposing several other regulations to continue TRESA implementation. We discuss the key regulations below.
As noted above, the Government first solicited feedback on a New Code of Ethics in the summer of 2021. The Revised Draft Code of Ethics separates ethical requirements from technical and procedural requirements. In fact, the government now proposes to move the technical and procedural requirements in the Current Code of Ethics be moved to other REBBA Regulations.
The updated Code is supposed to be principle-based and will articulate the requirements that RECO registrants must comply with in relation to matters such as integrity, quality of service, and conflicts of interest.
Under current REBBA rules, real estate brokerages representing a seller are required to disclose the number of competing offers to every person who makes a written offer. However, the current rules simultaneously prohibit these brokerages from discussing the contents of these offers. So buyers are left to bid in the dark, adding uncertainty to an already emotionally fraught decision.
The Ministry is proposing to open up the offer process and allow selling brokerages to disclose the details of competing offers at the seller’s direction. However, brokerages would be barred from disclosing any personal information or identifying information through this process to protect the privacy of competing bidders.
The Ministry is also proposing to make changes to the type of information that RECO registrants must provide to buyers, sellers and others about real estate services. Part of the new disclosure will also provide information about the registrants’ obligations towards their clients and educate individuals on their rights in relation to registrant conduct.
Under the proposed regulations the Ministry is seeking to enhance the powers and tools available to RECO.
The proposed changes include:
- updates to the information RECO must make publicly available
- outlining the purposes for which RECO can require registrants to provide transactional data and related information;
- empowering RECO with additional authority over administrative matters related to certain advertising, record-keeping and notice requirements.
As well as empowering RECO with additional authority over administrative matters, the Ministry is also proposing new regulations to deal with the rules and procedures of RECO’s Discipline Committee and ensuring that the proposed new regulation encompasses all the requirements currently spread between several different procedures and regulations.
Under s. 5 of REBBA, an auctioneer can obtain an exemption from the requirement to register with RECO. The Ministry is proposing to tighten the exemption requirements and proposing 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.
The consultation period for the current set of proposed regulations will close on January 24, 2022. The Ministry is currently targeting September 2022 as the date of implementation of these proposals.
As part of Phase 3, the Ministry intends to set out the details of the administrative penalty regime that was enabled through TRESA, 2020, as well as consider further areas of regulatory reform (including the introduction of certification programs or changes and updates to the registration process. specialist certification program, updates to the registration process).
Mississauga Real Estate Lawyers Helping Individuals with Their Residential and Corporate Real Estate Transactions
Real estate transactions represent some of the largest financial transactions in the life of any individual or company. Whether you are a first-time homebuyer or a large corporation acquiring a new space to grow your business, it is important to retain a law firm with the experience and skill necessary to ensure your interests are protected and the transaction closes without issue.
At Bader Law, we represent individual and corporate buyers and sellers in both residential and commercial real estate transactions in Mississauga and throughout Greater Toronto Area. We will advise you on your options, help secure your interests, and protect your financial investments. Contact us online or at (289) 652-9092 to learn how we can help.