In a significant move to strengthen consumer protection and professionalism in the real estate sector, the Ontario government has announced updates to the rules governing real estate brokerages, brokers, and salespersons. The Trust in Real Estate Services Act (TRESA), effective December 1, 2023, brings key changes to empower Ontarians in their real estate transactions.
Originally passed in February 2020, this new phase of TRESA focuses on educating buyers and sellers on their rights and what is legally required of a real estate agent. “These changes are all for the benefit of the real estate client. They ensure transparency and that real estate agents are clear and advocating for their clients,” said Brian Torry, Director, Centre of Excellence at eXp Realty.
Here’s what you need to know about the new rules and regulations.
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A Transparent Offer Process
Sellers now have the option to share the details of competing offers with buyers. All personal information that could identify the prospective buyer will continue to remain private. With this new open offer process, the seller decides whether they want to hold open or closed offers. If the seller chooses an open offer process, the buyer would be informed of competing offer details including prices, terms, conditions, deposits, and closing dates. The seller may also change their mind at any point throughout the offer process as long as the seller’s agent includes this clause.
A Shift From Customers to Clients
Previously, real estate professionals could work with buyers and sellers under the Real Estate and Business Brokers Act (REBBA) as either a client or a customer. According to the Ontario Real Estate Association (OREA), these terms were confusing for the public, leading to a shift to the terms client and self-represented party (SRP). When someone chooses to be unrepresented in a real estate transaction, they will now be referred to as an SRP and have access to more information about the risks they are assuming as well as the assistance they may receive from a real estate agent. The term client refers to anyone receiving client representation from a real estate agent. “This will provide proper representation to anyone with a real estate agent and for those that choose to represent themselves, they are able to do so with eyes wide open,” said Torry.
Updates to the REBBA Code of Ethics
The Code of Ethics has been updated with an emphasis on integrity, quality of service and conflicts of interest. The new Code is much smaller than the previous version, but now outlines all the ethical requirements real estate agents must comply with, while the technical and procedural recommendations have been moved to the general regulations. The reduction in the size of the Code of Ethics, now two pages compared to 11 pages, was designed so real estate agents can easily navigate through the regulations.
Enhanced RECO Discipline Process
The Real Estate Council of Ontario (RECO) is the Ontario regulating body of real estate professionals. Previously, RECO could only discipline allegations of non-compliance associated with the Code of Ethics. It will now hold real estate registrants accountable for non-compliance related to TRESA. RECO may now also suspend, revoke or apply conditions to a real estate agent’s registration.
The Introduction of Designated Representation Agreements
Currently, real estate agents can act under multiple representation in which one agent represents both the buyer and seller, however, the level of information the agent can disclose is limited. “Through designated representation, the client will have a Realtor that truly works for them. This is an important part of TRESA which ensures the client has someone on their side,” explained Torry.
Although multiple representation is here to stay, with the introduction of designated representation, a client can enter into this deal and two real estate agents from the same brokerage can now represent a buyer and a seller in the same deal. This allows agents from the same brokerage to disclose more information, benefiting both the buyer and seller. This real estate model is already used in other provinces including Alberta and Nova Scotia.
“It’s important that Realtors familiarize themselves with the updates to TRESA and are on top of the new rules to best protect clients,” said Torry. This new phase of TRESA is a historic moment for Ontario real estate agents. It provides real estate professionals with the tools needed to act in a client’s best interest. View the full Trust in Real Estate Services Act here.
