Last week, the Ontario government introduced the Trust in Real Estate Services Act, 2019 to update the current legislation that governs Ontario’s more than 86,000 real estate professionals. Yesterday, the bill passed second reading and was referred to the Standing Committee for witness testimony and further amendments.
The stated goals of the proposed legislation include improving consumer protection and choice in the market and improving professionalism among real estate professionals and brokerages through enhanced ethical requirements.
Some of the more significant proposed changes include:
- Disclosing Details of Competing Bids – At the seller’s option, the seller’s real estate agent may disclose the details of competing offers to other bidders. Currently, the seller’s agent is required to disclose the number of competing offers to all buyers who have submitted a written offer but the purchase price and conditions remain confidential.
- Clients vs. Customers – There will no longer be “clients” and “customers” and the often associated confusion over the brokerage’s obligations in respect to each relationship. Currently, brokerages owe “clients” a fiduciary duty to promote and protect their best interests in the real estate transaction, but they do not owe “customers” the same duty. Brokerages are only obligated to treat “customers” with fairness, honesty and integrity, and to provide conscientious and competent service. Under the new rules, the relationship and obligations are simplified: either you are a “client” or you are a “self-represented party” without any fiduciary duties owed to you.
- Multiple Representation – There were no proposed changes to multiple representation. Currently, an agent or brokerage is permitted to represent both the buyer and seller (or multiple prospective buyers) in the same transaction if all parties provide written consent. Given the inherent conflict of interest, there were discussions about banning the practice of multiple representation in Ontario similar to the ban in B.C. that began on June 15, 2018. It is expected that multiple representation will be subject to further debate and amendment in the legislative process.
- Penalties for Realtors – RECO’s discipline committee will be given the authority to suspend or revoke a real estate professional’s or brokerage’s registration, or impose conditions on a registration. RECO will be given the authority to impose fines of up to $50,000 for a broker or salesperson, or up to $100,000 for a brokerage.
- Professional Corporations – Real estate professionals will be allowed to incorporate, similar to physicians and lawyers, so that they may also enjoy the tax advantages.