The province of Ontario has proposed new legislation that will better enforce real estate agent ethics, with a particular focus on the practice of multiple representation – also known as “double ending” – where one agent represents both the buyer and seller in a real estate transaction.
Double ending has received intense media and public scrutiny over the past year, when it came to light it was being abused by some agents to double their commissions without their clients’ knowledge.
In an investigation by CBC’s Marketplace, a number of agents in the Toronto area were caught misrepresenting their services to undercover reporters posing as prospective buyers. In some instances, listing agents even guaranteed the sale of the home to a buyer in exchange for representing them in the deal. Such behaviour is a direct violation of the code of ethics (REBBA 2002) that govern real estate agents.
Improving Transparency in Real Estate Transactions
Tracy MacCharles, minister of Government and Consumer Affairs, announced the pending legislation at Queens Park on October 5, confirming the province is addressing calls to protect the public and improve transparency in real estate transactions. “What we’re doing is responding to what’s been in the press a lot about multiple representation where you have one agent on the same transaction,” she said.
The changes won’t ban double ending outright, but will enforce a preference for a Mandatory Designated Representation model, requiring that agents represent only one side of a transaction, and to refer one of the clients to another agent in their brokerage when applicable.
Can Agents Be Impartial?
There can be exceptions, however. “Specific situations such as in rural Ontario where there might not be more than one agent, perhaps in a family situation … or perhaps in commercial or industrial situations where external real estate representation and expertise is essential,” says MacCharles. An “impartial facilitator” role for agents in these scenarios is also being explored; however, consultation is pending on how best to enforce the practice, and how to educate the public on their rights.
Those who break the rules will be subject to steeper financial penalties, with fines doubling from $25,000 to $50,000 for individual agents and up to $100,000 for brokerages.
Support from the Real Estate Industry
The proposed legislation has been applauded by various industry bodies, including the Toronto Real Estate Board and the Ontario Real Estate Association.
“Right now, too often fines amount to a mere slap on the wrist,” stated Tim Hudak, OREA’s CEO. “Ontario needs much stronger deterrents for unethical behavior and a regulator that isn’t afraid to throw the book at the small number of rule breakers.”
In a release, TREB also threw its support behind addressing the conflict of interest posed by multiple representation, and the province’s move to a one-agent-per-transaction model.
“TREB is pleased that the Ontario government is listening to the advice provided by the industry and is working to bring forward a workable solution,” said Tim Syrianos, TREB president.
What Sellers Need to Know About Double Ending
While double ending isn’t outright illegal – it can occur as long as both buyer and seller understand the implications and consent in writing – it often puts the seller at a disadvantage, especially in a hot real estate market, says Zoocasa broker of record Lauren Haw.
“Effectively representing your seller’s interests requires working with every potential buyer – including those represented by other agents,” she says. “Controlling the situation in order to ensure both sides’ commissions risks ostracizing the buyer who was actually willing to pay the most for the property.”
She says that if sellers are wise to ask the following questions when choosing a listing agent to ensure their best interests are being represented:
- Do you work in the industry full- or part-time?
- Have you ever represented both the buyer and the seller in a transaction?
- How would you handle a multiple-offer situation while selling my home?
- How will you prepare me to put my best offer forward?