The Season Isn’t the Only Thing Changing - Issue 388

As the clock starts to run out on 2023, a number of significant changes are about to take place in the Ontario Real Estate landscape. A long anticipated update to the legislation that governs how real estate practitioners conduct business is about to launch. These changes modernize real estate practices and bring a lot more clarity and transparency for consumers.

The Trust in Real Estate Services Act (TRESA) introduces significant changes to real estate practices in Ontario, effective December 1, 2023. These changes are intended to enhance clarity and consumer protection in the Real Estate market. Key aspects of TRESA include:

Designated Representation

Under TRESA, two agents from the same brokerage can represent both the buyer and the seller in a single transaction. This approach ensures neutrality from the brokerage while maintaining dedicated representation for both parties. In the past, the brokerage represented the clients and while the agents worked with those clients, there was never a clear definition of who was representing who.

Self-Representation

TRESA allows for self-representation in real estate transactions, meaning individuals can handle the process without a real estate agent or brokerage. This change replaces the previous "customer" designation with "self-represented party," emphasizing the absence of professional guidance or services from a realtor for these individuals. This is the biggest change because up until now, most agents would willingly work with customers (people that hadn’t signed a “listing agreement” to buy or sell), providing guidance, advice and information, without representing them. Consumers assumed we were implicitly representing them when, in the eyes of the legislation, we weren’t.

Open Offer Process

Sellers can now choose to share competing offers with other potential buyers, provided no personal details of the people offering are disclosed. This process is subject to specific instructions given by the seller to the brokerage. This is the biggest change in order to bring clarity to the offer process and to help eliminate the blind bidding process. It will be interesting to see how many sellers embrace this and how much pushback comes from buyers.

Written Agreements and Disclosures

All monetary compensation, like commission and referral fees, must be clearly stated in written agreements. Additionally, TRESA mandates that Realtors® disclose all known facts about a property to potential buyers, increasing transparency in real estate transactions. Not a lot of change here, as we’ve always had to disclose this information. What has changed is a lot of the forms and how we go about the disclosure process.

Consumer Information Guide

The Real Estate Council of Ontario (RECO) will release a guide for consumers, which must be provided to clients and self-represented parties before any services begin. This guide aims to ensure comprehensive understanding and compliance with new regulations. This is the biggest change.

We’ve still only been able to look at draft versions of this document. It’s 13 pages and as Realtors®, we’ll have to review it with consumers and have them acknowledge it before we can go any further in the sales process. This, I guarantee, will be messy initially. Not that I’m against it, I just know human nature around salespeople and paperwork. This is going to be a handful even for consumers. That said, it is needed. 13 pages though??

Code of Ethics Revision

TRESA introduces a revised code of ethics focusing on key aspects such as conflicts of interest and confidentiality. This will bring clarity and better disclosure for everyone.

Enhanced RECO Discipline Process

The RECO discipline committee is empowered to address allegations of law breaches, not just code of ethics violations. It can also take actions like suspending, revoking, or adding conditions to registrations. This is long overdue! RECO needs some teeth to help weed out the bad actors in the industry. The previous fine levels were seen as a cost of doing business by the less ethical.

New Standard Forms

The Ontario Real Estate Association (OREA) is updating standard forms to align with TRESA, including clarifying brokerage/consumer relationships and ensuring compliance with new regulations. We have 213 forms covering every aspect of real estate in Ontario. OREA reviewed every form, updated over 60, eliminated 29, and brought in 30 new forms. That’s not including the updated clauses that OREA publishes for professional Realtor members to use. We’ve got a lot of training to do over the next few months.

These changes will have a major impact on how real estate sales are conducted in Ontario. The emphasis on greater transparency, ethical conduct, and consumer protection is a welcome change. Real Estate professionals and clients alike will need to adapt to these new regulations and practices. It’ll take some time for everyone to get used to these changes. The outcome should be a better process for everyone and less headaches for Broker of Records like me.

If you need help understanding what these new changes mean for you as a buyer or seller, don’t hesitate to reach out to our team. We pride ourselves on prioritizing education, continual training, and keeping our agents up-to-date on all the moving parts in the market.

Thanks for reading & have a great weekend.

Paul

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