The Ontario government is updating the province’s real estate rules for the first time in nearly 20 years in a move it says improves consumer protection and gives the real estate industry regulator more latitude to immediately sanction or fine agents and brokers who violate the profession’s ethics and regulations.
The 2002 Real Estate Business Brokers Act (REBBA) is being renamed The Trust in Real Estate Services Act. The bill will provide homebuyers and sellers with more information and more choices, said Government and Consumer Services Minister Lisa Thompson.
“The real estate market in Ontario, and quite frankly across Canada, has seen enormous changes since the act was first passed 20 years ago,” she said. “Economically real estate is booming. Between 2005 and 2015, the total value of all residential properties more than doubled in Ontario.”
“This will make Ontario a leader again when it comes to having faith in your real estate professional,” said Tim Hudak, CEO of the Ontario Real Estate Association (OREA).
Under the revamped legislation, home sellers would have the option of disclosing competing offers in a multiple buyer situation.
The current rules require selling agents to tell all potential purchasers how many offers have been submitted for a property but they cannot disclose the monetary or other conditions of those offers.
“Down the road we want to allow at the sellers’ discretion, not the brokerage’s discretion, we want people to know how much those offers are if they see it as beneficial to them,” said Joe Richer, registrar of the Real Estate Council of Ontario (RECO), which regulates agents and brokerages.
“The reality is that may benefit some sellers. But many may say I like the process the way it is,” he said.
The government is also changing the language around transactions where the buyer and seller is represented by the same brokerage — a practice commonly called double-ending.
The word “customer” will be eliminated from the forms and language used in those transactions, Richer said.
“A consumer will either be a client to whom a fiduciary duty is owed or they are self-represented,” he said.
The idea is to make it clear that while the same brokerage can provide information to both parties of that transaction, it can really only represent and work in the best interest of either the buyer or the seller.
RECO will also be able to immediately levy administrative fines to agents and brokers for relatively minor infractions such as breaking advertising rules or failing to provide a monthly reconciliation of accounts held in trust by the brokerage — “things where it’s clear you either did or didn’t,” Richer said.
Its ability to issue fines or order education for rule-breaking agents and brokers will be expanded and streamlined to allow RECO to sanction those violators more quickly.
“That’s a big thing for us. Today if we want to revoke somebody (take away their registration) we usually go to provincial offences court and then we would use that to get the charges for bad conduct and then we go to licence appeal tribunal,” he said.
Brokers will still be able to appeal but it will be a single-step process through the provincial Licence Appeal Tribunal.
Giving RECO the power to act quickly to revoke the licences of realtors “for more egregious violations of the code of ethics — taking advantage of consumers,” will result in higher professional standards, Hudak said.
The association that represents 86,000 agents, brokers and brokerages says the modernized real estate legislation will allow agents to incorporate so that they can defer some of their income and better ride out the highs and lows in the business cycle.
It will also limit realtors’ ability to claim they are specialists in a particular area or type of property, he said.
“If you say you’re a specialist you’d have to back it up with something,” he said. “You have to hit certain education requirements.”
RECO will consult on what those requirements would be.
“We think this is a major step forward for consumer protections,” he said.
But Toronto real estate broker John Pasalis of Realosophy suggested the new legislation would benefit realtors more than consumers.
Allowing agents to incorporate personally “will benefit high earners looking to shelter earnings,” he tweeted Tuesday.