Legislation Update: Changes to Encourage Transparency in Real Estate Transactions as of December 1, 2023

A Summary of highly anticipated changes to the Trust in Real Estate Services Act.

By Ashley Hizo and Slonee Malhotra

On December 1, 2023, phase 2 of the Trust in Real Estate Services Act (TRESA) will come into force to replace the Real Estate and Business Brokers Act (REBBA). Phase 2 brings with it several important changes for consumers and real estate professionals in Ontario, all with the aim to provide greater transparency and clarity in communication between consumers and real estate professionals.

This article will provide a general overview of the substantive changes that real estate professionals and consumers should be made aware of, this includes: multiple and designated representation, self-represented parties, open offer process, written agreements and disclosures, consumer information guide, a refined code of ethics and discipline process.

Multiple and Designated Representation

TRESA phase 2 will allow parties to enter into an “agreement of designated representation” as an option for consumers. Designated representation permits two agents at the same brokerage to represent both a buyer and a seller in a single transaction. Brokerages do not need to choose between multiple or designated representation but must elect the type of agreement at the beginning of any given transaction. If a brokerage elects to proceed by designated representation, the brokerage would remain neutral but would be responsible for retaining the oversight responsible for each agent’s fulfillment of their respective duties.

Self- Represented Parties

Under the soon to be phased out REBBA, there were historically two terms: client and customer. “Customer” can be seen to cause confusion as it may imply a professional relationship or association with the realtor/ brokerage. With the implementation of TRESA phase 2, “customer” will now be replaced with “self-represented party”. Put plainly, a self-represented party is a party who is not a client of any brokerage. Realtors will be prohibited from providing services, opinions or advice to a self-represented party.

Open Offer Process

With the implementation of TRESA phase 2, sharing the contents of competing offers will now be permitted with the seller’s written direction.

Written Agreements and Disclosures

Any services promised to a client regarding the listing of a property such as commission, referral fees, incidental services, staging, or photography must now be listed in the written agreement itself.

Also new is an obligation requiring realtors representing a seller to disclose facts to potential buyers if those facts are known to the realtor.

Consumer Information Guide

The Real Estate Council of Ontario (RECO) will be releasing a new information guide for consumers. This guide shall be mandated and must be given to clients and self-represented parties that interact with the real estate agent and the brokerage prior to providing any services. In addition, the realtor must explain the guide to the consumer. Brokerages are not permitted to create their own information guide. Agents are not permitted to provide any services or advice to a self-represented party unless the guide has first been provided.

Code of Ethics

TRESA phase 2 will also serve to revamp the existing code of ethics by retaining all the ethical requirements within the code and relocating all technical and procedural requirements to more general regulation sections. As a result, the code of ethics will be smaller in size but will more accurately reflect ethical obligations it aims to codify such as conflict of interest and confidentiality.

RECO Discipline Process

The RECO discipline committee will continue under TRESA but its scope will be expanded. Phase 2 of TRESA will give authority to the discipline committee to deal with allegations of breaches of the legislation, not just the Code of Ethics. In addition, the discipline committee will also have the authority to suspend, revoke, or apply conditions to a registration if and when applicable.

For any questions related to this article or legal assistance regarding a real estate matter, we encourage you to reach out to one of our experienced real estate lawyers at SorbaraLaw.