Background

OREA has been calling on the Government of Ontario to allow for designated representation since 2017. We took that position when the previous Liberal government was consulting on a multiple representation ban. Instead of a ban, OREA proposed a model which would permit two agents at the same brokerage to represent both a buyer and seller in a single transaction.

Q: What is multiple representation and why is OREA calling for its optional practice in Ontario?

Definition of Designated Representation

Designated representation is not anything new as a business model because it is used by brokerages in other provinces, like Alberta and Nova Scotia. It allows a brokerage practicing designated representation to have the option to work with both the buyer and the seller in a single transaction. The proposed model of designated representation says that the duty owed to the clients would apply to the designated agents within a brokerage for the specific, identified transactions, not the brokerage and all of its REALTORS^®.

Example

ABC Realty Inc. has a listing, and the brokerage also happens to represent a buyer that is interested in that listing. In other words, the brokerage represents the seller and the buyer. Today, that is known as multiple representation. In the proposed designated representation model, the listing agent would be able to represent the seller, while another agent at ABC Realty Inc. would represent the buyer on behalf of the brokerage to advocate solely for the buyer. The Brokerage would retain oversight responsibility for the designated agent's fulfillment of the duties to the clients.

Q: Why is designated representation a good practice for both REALTORS^® and consumers?

Key Points

• Brokerages will not need to pick one agency model over the other. OREA was successful in getting the Government of Ontario to allow brokerages to use both representation types on a transaction-by-transaction basis.
• The type of agreement would need to be determined at the beginning of the transaction.
• Multiple representation will still exist. The proposed model of designated representation calls for multiple representation still to be an option but adds designated representation as another positive option for consumers.
• The government’s proposed regulations also include additional changes to how REALTORS^® are expected to treat multiple representation situations. Currently, if a REALTOR^® represents a seller and a prospective buyer in the same trade, after receiving a written offer, but before the offer is accepted, the REALTOR^®must disclose this fact to every other buyer who makes a written offer.
• NEW: A REALTOR^® shall obtain a written acknowledgment from each person receiving the disclosure indicating that the disclosure has been received.
• REALTORS^® will be required to disclose the differences between the brokerages obligations if it represented only one client versus multiple representation, with specific reference to its obligations and duties services and its remuneration agreements.

Q: What happens under TRESA when a brokerage represents both a seller and a buyer in multiple representation?

Multiple and Designated Representation (PDF)→

Definition of Self-Represented Party (SRP)

Under REBBA, there were two definitions which REALTORS^® had to know - client and customer. The Ministry felt that the terms client and customer were confusing for the public, so the term customer will be removed entirely from TRESA. Moving forward, there will be two terms – client and self-represented party (SRP). An SRP is simply a party who is not a client of any brokerage.

Q: Where can I find the Information and Disclosure to Self-Represented Party Forms?

• A: RECO provides and maintains the Information and Disclosure to Self-Represented Party Forms for both Designated Representation and Brokerage Representation. Both can be accessed by visiting RECO’s website at reco.on.ca:
• Designated Representation Version
• Brokerage Representation Version

Q: Why is the government introducing the new consumer designation of ‘self-represented party’, effectively eliminating the customer relationship, and why is this ultimately better for consumers?

Q: How does the new self-represented party designation differ from the customer designation that currently exists under REBBA?

Example

There are two instances where a self-represented party (SRP) could interact with the REALTOR^® without the interaction giving rise to an implied agreement between the REALTOR^® and the SRP.

First, an SRP can receive general information relating to the business of trading and real estate, like general real estate market statistics. Second, a REALTOR^® could provide assistance to an SRP if that assistance is a service to their client, for example, as the seller’s representative showing that listing to an SRP. However, the SRP has engaged for services only, not a duty of care. Should the SRP wish to purchase the property, the REALTOR^® may assist the SRP with the mechanics of filling out an Agreement of Purchase and Sale, but would not be able to provide any advice, otherwise you have created unintended agency by relying on your skills and judgement decision to the SRP.

Q: Is there a list of activities that represents the "assistance" that is allowed to be provided to a self-represented party under TRESA?

Key Points

How to engage with a self-represented party

Per Section 10 of the Code of Ethics, REALTORS^® will be prohibited from providing services, opinions or advice to an SRP.

However, as a service to the REALTORS^® client, assistance may be provided to an SRP after:

• The self-represented party has received the mandatory RECO information guide
• And the self-represented party acknowledgment form prepared by RECO has been signed
• It will be the responsibility of the REALTOR representing the brokerage to provide an explanation of the documents to an SRP

Q: Do you have any advice on how to convert a self-represented party into a client?

What is the SRP acknowledgement form and how do I execute this form?

• The SRP Acknowledgement Form is a disclosure that the brokerage will be representing a client with respect to the trade. For instance, if there is an SRP that is the buyer for a client’s listing, the form will disclose that relationship.
• The form outlines the risks that may arise after an SRP receives assistance from the brokerage and the types of assistance that the brokerage will be permitted to provide an SRP.
• The form recommends that the SRP seek professional advice from another real estate brokerage or lawyer and requires the self-represented party’s signature.
• Once the form is signed and executed, REALTORS^® are required to return a copy of the form to the SRP.
• The form is maintained and provided by RECO – the form for both designated and brokerage representation are available for download on RECO’s website.

Q: If there is no representation agreement with a self-represented party, are they required to sign anything during a real estate transaction?

Self-Represented Party (PDF)→

Definition of Transparent Offer Process

In TRESA, sellers have another option to negotiate the sale of their property. If the seller directs the brokerage, the TRESA general regulations allow for the details of competing offers to be shared with other buyers. No personal information may be disclosed or any other information that would identify the person making the offer. It is important to note that it will still be a requirement for a brokerage to disclose the number of registered offers to competing buyers.

Q: What happens if the seller decides to change their mind halfway through the transaction and goes from a closed to a transparent offer process or vice-versa? Can the buyer withdraw their offer?

Q: What types of information can a seller can disclose to other buyers during a transparent offer process transaction?

Sharing Contents of Offers (PDF)→

TRESA implements some changes to the contents of written agreements and outlines new requirements for disclosures.

Q: What are the new rules surrounding disclosures under TRESA?

Key Points

Listing agreement and the remuneration payable to any other brokerage

• OREA’s existing standard form includes a space to insert the cooperating brokers' commission. However, it is the decision of the seller about how much remuneration is payable to any other brokerage and needs to be a conversation that happens between the listing brokerage and the seller.
• The contents of written agreements must clearly outline the circumstances where the payable remuneration may change. In practice, some listing brokerages may reduce their remuneration if the listing agent also represents a buyer in a transaction. Moving forward, this practice is not allowed and needs to be part of the written requirement.

Q: What changes can we expect to the contents of written agreements under TRESA?

Services provided by a brokerage and the expiry date of the agreement

• Advise you on market conditions and the best strategy to attract buyers and get the best price for your home
• Assist you with getting pre-approvals for financing so you know how much you can afford

TRESA requires disclosures on:

• Multiple representation
• Material facts and latent defects
• Conflicts of interest
• The existence of a Seller Property Information Statement (SPIS).

TRESA regulations also require:

• Disclosures to be written and in clear and concise language
• REALTORS^® must obtain a written acknowledgment from the client indicating that the disclosure has been received
• Once the written acknowledgment is signed, a copy will then need to be provided to the client

Q: What are common examples of disclosures in a real estate transaction and are there any new disclosures that are required to be made under the Act?

Changes to Written Agreements and Disclosures (PDF)→

The Real Estate Council of Ontario (RECO) will be releasing a brand-new information guide for consumers. The information guide prepared by RECO is mandated and it is the only acceptable version of the information guide. Brokerages are not permitted to create their own information guide and must provide the consumer with the guide that is prepared by RECO.

Q: What is the new information guide and when should I give it to my real estate consumer?

Key Points

• REALTORS^® are mandated to provide consumers with an information guide and explain the contents of the guide before providing any services.
• OREA worked with RECO and the Ontario Government on the launch of the new information guide, now available online at reco.on.ca.

OREA continues to work with RECO on the launch of the new information guide and will provide our Members with the resources to help explain the information guide to your clients.

Q: Where does the information guide come from, and do real estate consumers have to acknowledge its receipt in any way?

Consumer Information Guide (PDF)→

Updates to the Code of Ethics

The new TRESA Code of Ethics have been updated so that the ethical requirements are retained within the Code but all of the technical and procedural requirements have been moved to the general regulations or other regulations. This means that the Code of Ethics truly articulates the requirements that REALTORS^® must comply with related to integrity, quality of service and conflicts of interest. As a result, the new Code of Ethics is much smaller compared to the old.

Q: What are some of the changes that we can expect from the new REALTOR^® Code of Ethics under TRESA?

Updates to Code of Ethics (PDF)→

Changes to RECO’s Discipline Process

The introduction of TRESA was a result of OREA’s own advocacy to set the highest real estate standards in North America and to crack down on bad actors in our profession. In addition to the new legislative and regulatory standards enacted by TRESA, the scope of RECO’s discipline committee will be expanded.

Key Points

The RECO discipline committee will now have the ability to:

• Suspend, revoke, or apply conditions to a registration
• Investigate a REALTORS^® conduct and refer the matter to the discipline committee whether a formal complaint is made or not

The composition of the discipline committee will consist of five or more members and at least one of those members must have no connection to the real estate industry. Any appeals of RECO discipline committee decisions will be to the License Appeal Tribunal (LAT), an independent quasi-judicial tribunal, rather than RECO’s appeals committee. The resulting discipline, including the reasons for revocation or suspension of a registration, will be made available to the public.

Updates to the RECO Discipline Process (PDF)→

The Importance of TRESA

Q: What is the significance of TRESA regulations, not only for Canada, but specifically the province of Ontario?

Updates to Registration Status

Under TRESA, real estate professionals can now relate to the terminology consumers have always used. Anyone in good standing with the Canadian Real Estate Association (CREA) can use the term REALTOR^®in their ads and social media platforms.

Q: How is the registration status different under TRESA?

Updates to Drip Campaigns

Many REALTORS^® send new listings to prospective buyers via a ‘drip campaign’. Under the new TRESA, this practice of sending listings to a prospective buyer in real time would continue to be permitted.

Q: Have the rules around ‘drip campaigns’ for prospective buyers changed under TRESA?