A new form has been created to help REALTORS® comply with legislation aimed at preventing phantom offers – potentially fabricated bids that spark extra bidding. Phantom offers could be used to intimidate buyers into thinking there are other offers on a property and could incite them to raise their own bid.
The provincial government introduced new regulations that took effect on July 1, 2015. Amendments to The Real Estate and Business Brokers Act, 2002 (REBBA) were passed as part of Bill 55, The Stronger Protection for Consumers Act, 2013. This legislation is intended to address the issue of phantom offers in the marketplace. The introduction of phantom offers by registrants is considered to be a breach of ethics, according to the real estate industry’s regulator, the Real Estate Council of Ontario (RECO).
"OREA has created a new form that meets the requirements for a prescribed document but is just a single page."
“The new rules clearly state that you can’t tell a seller that you have received an offer unless that offer is written and signed by a buyer,” says Cassandra Agnew Walker, senior manager, standard forms, at the Ontario Real Estate Association (OREA).
“Another change is that a brokerage must keep a copy of all offers received to present to a seller or keep an ‘equivalent prescribed document’ for one year,” says Agnew Walker. “Keeping all pages of any unsuccessful offers will most likely add significant paper to a brokerage’s listing file and is likely an administrative burden on the brokerage, so OREA has created a new form that meets the requirements for a prescribed document but is just a single page.”
But what is a “prescribed document”? A RECO fact sheet outlines what must be included in a summary document according to the legislative changes. The RECO fact sheet also includes a question-and-answer document for registrants to address issues pertaining to Bill 55 that may occur during real estate transactions.
OREA’s new form aims to meet the needs for the content required within a prescribed document. It is Form 801: OREA Offer Summary Document for Use with Agreement of Purchase and Sale. “This new form was created by OREA to satisfy the need for an “equivalent prescribed document,” she adds.
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Form 801 was developed with input from members of OREA’s standard forms committee, which includes a RECO representative.
A summary document, which is shorter than an offer, must contain the following: the buyer’s name and signature; the seller’s name and contact information; the name of both the buyer’s and the seller’s brokerage and each respective representative; the property’s address, legal description or other identifier; the date and time the offer was made and received by the brokerage and how it was received (in person, fax); the date of the offer presentation; and the date and time if any, the offer was irrevocable.
OREA successfully lobbied the government to amend the bill, arguing that the requirement to keep all pages of every unsuccessful offer would be too unwieldy for real estate brokerages and would add significant red tape. The addition of “prescribed equivalent document” to the legislation reduces the administrative burden on real estate practitioners but still meets the intent and requirements of the new law, says Agnew Walker.
An announcement titled Bill 55: Changes for the handling of offers
, was posted to RECO’s website this spring. The new rules include the following key changes:
- A registrant working on behalf of a buyer cannot present or represent an offer unless the offer is in writing and signed;
- A brokerage must keep copies of all written offers to purchase real estate (that it receives to be presented to their seller) or copies of an equivalent prescribed document for each offer, for one year.
A number of questions from members with detailed answers are posted to the OREA blog. This can be a resource for brokerages and individual members.
Form 801 is available to members through their software providers and is posted to the OREA website. After logging in to the Members’ Section, click on Standard Forms and then on Form 801. You can also get more detail from the downloadable Forms Explained file package on the OREA Standard Forms page, a resource created by OREA that provides general explanations in plain language about the forms created by the association.
The association has created a video tutorial and a webinar that give REALTORS® help and information on how to complete Form 801.
If you have questions or comments about the new form, send an email to: firstname.lastname@example.org.
Story by Mary Ann Gratton.
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