Phase 2 of the Trust in Real Estate Services Act (TRESA) comes into force on Dec. 1, and it will impact how Ontario’s 96,000 realtors do business.
TRESA replaces the decades-old Real Estate and Business Broker’s Act (REBBA), and three of the most significant changes include:
- Self-represented parties;
- Sharing the contents of offers; and
- Designated representation.
Self-represented parties
The difference between being a “client” or a “customer” during real estate transactions has been a source of confusion for some.
To eliminate confusion, the term “customer” will be removed from TRESA. Once TRESA is effective, real estate consumers can choose to be either a client of the brokerage or self-represented. The expectation is that former customers will become clients.
TRESA also defines and puts rules in place for self-represented parties.
Put simply, a self-represented party is a consumer who chooses to represent themselves in a real estate transaction.
A self-represented party is not to receive any services from a brokerage. This is very different from being a customer who could receive services under REBBA.
So then, what can realtors do for self-represented parties? They can only provide assistance while ensuring that implied agency is not created.
TRESA states that implied agency is not created if “as a service provided to a client, or incidental to a service provided to a client, a registrant provides assistance to another person without encouraging the other person to rely on the registrant’s skill or judgement in response of a trade in real estate.”
In other words, providing assistance is acceptable as long as the self-represented party does not rely on the registrant’s skill or judgment.
For example, if a buyer who chooses to be self-represented asks you to show them another brokerage’s listing, you can’t. TRESA is clear that you can only provide assistance “as a service provided to a client.” Another brokerage’s seller is not your client.
Another example: A self-represented buyer is interested in purchasing one of your brokerage’s listings, and the buyer has a home to sell; the buyer should determine the language required in the purchase and sale agreement for the sale of their property. The realtor assisting the buyer should not recommend the wording for a condition because determining the correct wording requires their “skill or judgment.”
Sharing the content of offers
Another big change effective Dec. 1 is being able to share the content of competing offers.
REBBA requires that all buyers are made aware of the number of competing offers. This requirement remains under TRESA. However, TRESA allows realtors to share the contents of offers with every buyer who submits an offer at the seller’s written direction.
A seller shall decide which content is to be shared so long as the information disclosed is not the personal information of the person making the offer. Examples would include the buyer’s name or the address of the buyer’s property should the buyer have a home to sell.
It is important to note that seller’s agents are not required to decide if they will share the content of offers at the time their property is listed for sale or not later than the presentation of offers. For this reason, buyers’ agents should ask their clients how they would feel if the contents of their offer were shared with other buyers.
If a buyer is opposed to a seller disclosing the terms of their offer, the realtor may want to recommend a condition in the offer to this effect.
Designated representation
The last of the many changes under TRESA is the introduction of designated representation.
The agency relationship exists between the brokerage and all its representatives in common law agency. When practicing designated representation, however, the agency relationship is between the consumer and the realtor designated as their agent.
By way of example, ABC Realty Inc. has a listing, and the brokerage also happens to represent a buyer who is interested in that listing. In other words, the brokerage represents the seller and the buyer; today, this is known as multiple representation. Practicing a 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 their duties to the clients.
It is important to note that brokerages need not pick one agency model over the other. The Ontario Real Estate Association (OREA) was successful in convincing the provincial government to allow brokerages to select either common law agency or designated representation on a transaction-by-transaction basis.
There are many other regulations under TRESA that Ontario realtors must be aware of. Members can visit OREA’s Guidance Hub to find the information needed to navigate the new regulations. This includes a detailed FAQ, backgrounders and video explainers that dive into important topics.
Ray Ferris is Chair of OREA’s Trust in Real Estate Services Act Regulations Task Force. He is Broker of Record of Erie’s Edge Real Estate, a Fellow of the Real Estate Institute (FRI) of Canada, a recipient of OREA’s “Cardarelli Legacy Award, and 2016 President of OREA. Ferris has been a REALTOR® for 27 years.
But, but, but … I thot the whole idea was to Stop Double-ending? Just like the 801 etc was supposed to Stop Phantom Offers and then there is the ill-fated effort at CREA to Stop Coming-Soon.
I won’t even breathe a word about Mandatory/Optional or outside-the-Mandate on the “other” hot topic among members for late 2023
I agree with you . What the article (willfully ? ) neglected was to mention that this is actually a RECO initiative.
BC has been doing this for a few years. You won’t stop double ending all together, there will always be buyers that want to represent themselves. Wink wink… IMO if a buyer and seller agree in writing and are fully aware of any risk that the agent write the offer on the buyers behalf, then it is the buyer/seller that take on the risk. I am getting tired of organizations and governments dictating to the consumer how they will buy or sell.
Just wait Ontario, if you follow BC the worst is yet to come. We are so heavily regulated. If you don’t like it the consumer needs to speak up.
You are so right.
The boards and crea have imposed themselves as agents gate keepers. As a former agent I am readying my home for sale this year and crea has now taken away exclusive listings for those of us who want privacy and to avoid the local boards rule of “available to show at all reasonable times”. Because of this I will be marketing my listing publicly and to local agents myself, not because I want to but because I now have too.
this doesn’t feel right! we pay so many licensing fees yet we are not protected as professionals.
Yup, as already indicated in the comments, BC has had these regs for some time now. Another nothing burger from OREA. The writing on the wall is quite apparent: there’s a dinosaur in the room that needs to be shown to the door.
Oye
It’s Official every REALTOR in Ontario will be forced to ensure
every home buyer they encounter will be informed and educated on
SELF-REPRESENTATION.
SELF-REPRESENTATION will now be cited on every OREA form for the first time in history.
Thank You OREA ! You continue to make our lives as realtors worse!
The litigious conditions Ontario will be under as home prices continue to fall this fall have never happened in the past. This legislation arrives just as the fall market is concluding.
That said with BB co-op fees averaging $23,000 how many lawyers are licking their chops in preparation of earning an extra $2000 per deal by assisting a Buyer?
Lets not begin on the problems this creates for Listing Agents…
Can you imagine telling a potential seller at a listing presentation that in a housing slowdown you WILL NOT show a SELF-REPRESENTED Buyer through the home when that Buyer requests you do so?
Dan,
Does self representation mean I can save 50% of the commission on a home if I don’t use an agent ?
We are looking to spend over $1 million in Brampton and with so few homes to choose from we really don’t need an agent as they post new listings on realtor.ca to my understanding within 4 hours of the agents seeing it on their own system.
Most of the homes have offer dates posted and that would give us lots of time to have our lawyer draw up the offer without needing our Agent.
That $30,000 of savings would cover our land transfer tax, moving costs etc and still pay a couple of months of our mortgage when we first move in.
Is this what you are claiming is now available to us ?
Thanks for any reply.
you are ill informed with most of your comments and questions
Sarah,
First you should expect to find more homes to choose from over the next couple of months and always be wary of any agent who posts an “offer date” if you suspect the home is listed for less than similar homes on the market.
The legislation requires RECO to create a guide that will be provided to you free of charge discussing Self-Representation in full. Of course you can still choose to hire a Buyer’s Agent if you so choose and that too will be a required disclosure to you.
You commission question is a good one because a co-op fee in Ontario is commonly 2.5% of the selling price of a home which it will be interesting to see how RECO handles that disclosure for Self-Represented parties.
Yes, you are correct that realtor.ca is updated quick enough today that your realtor would have to be sitting at their computer to learn about a new listing before you should expect to see it on realtor.ca and there is no longer any advantage to early access from your agent directly.
I highly encourage you to use a lawyer whether you use an agent or choose self-representation simply because of the poor quality of offers I have seen being presented on our listings with increasing frequency.
I encourage you to visit the RECO website for full details and the latest updates on when the guides and documentation will be made available.
Dan
If I understand correctly what would happen is that cooperating brokerage commission now become transparent in selling price as most of the time new buyers fill less comfortable to buy without some advise..so they need agent.. previously buyer can be customer and commission comes from seller .. but now buyer has not that choice as he can be either self repsented or client. If he chose to be client then seller can tell cooperating brokerage commission he won’t pay as it is service used buy buyer not by seller
There is too much government interference in real estate today. I’ve sold real estate for over 45 years and if agents would of been severely disciplined when they did things that were questionable or shady we wouldn’t have all these rules and regulations. The higher ups want to make this business more complicated which makes the public more suspicious about real estate.
I appreciate the main points of TRESA that have been presented herein.
What I find unfair is that TRREB and it’s excellent MLS system plus all their services are products of an Organization that is supported by its members and said members need to get paid for their services, being commissions, when properties are sold and or purchased in order to pay TRREB fees and related Organizations fees. Is it fair that buyers are given the right to directly or indirectly use the aforementioned services at no cost? If the aforesaid Organizations would be financially supported by the Government then it would be different.