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What to expect from Ontario’s new Trust in Real Estate Services Act

In November 2019, the Ontario government introduced the Trust in Real Estate Services Act, 2019, a bill proposing changes to the Real Estate and Business Brokers Act, 2002 (REBBA), Ontario’s real estate consumer protection legislation, administered by the Real Estate Council of Ontario (RECO). The bill recently passed third reading.

The current rules will remain in place until the government can develop and implement new regulations. There is a lot of work to be done and the government has not committed to a timeline yet, but RECO expects that new rules could come into place as early as 2021, though changes around incorporation may take effect sooner.

Ontario’s real estate marketplace and technology have changed substantially since 2006, the last time the legislation was substantively amended. The government aims to modernize the legislation to:

  • reflect changes in the marketplace;
  • enhance protection for buyers and sellers; and
  • reduce regulatory burden.

The changes support and strengthen consumer protection and professionalism in the real estate sector. This is good news for consumers and the real estate profession.

There are many important reforms in the legislation that will improve protection for Ontario’s buyers and sellers. Here are a few highlights.

A modern, efficient and effective regulator.

RECO’s regulatory authority would be updated, allowing it to issue financial penalties for specific breaches of the legislation, under specific circumstances. There would be fines for specific infractions, which can be appealed.

  • The Discipline Committee’s oversight would broaden to include the ability to impose conditions on registration, suspend a registration and revoke a registration, authority it currently does not have. Appeals of all matters decided by the Discipline Committee would progress to the Licence Appeal Tribunal rather than a RECO Appeals Committee.
  • The registrar’s authority to inquire into conduct and refer a matter to the Discipline Committee would be expanded, to include allowing for a referral to the Discipline Committee, whether there has been a formal complaint filed or not.
  • RECO’s registrar would be able to consider additional factors when determining eligibility for registration, including the past conduct and past financial position of an applicant.
  • New regulation-making authority would allow regulations to enhance the registrar’s authority to request specific information and how and when it is to be provided. This would bolster RECO’s ability to gather the necessary data required to maintain sector information and enhance its data-driven approach to enforcement and risk-management.
Enhanced consumer protection.

The term “customer” would be removed from the act, effectively eliminating the customer relationship as currently defined. Instead, the law would seek to clarify whether someone is represented by a brokerage or is self-represented. Changes in regulation would clarify the relationship between a registrant, clients and other people. Such a change would strengthen the effectiveness of the laws surrounding multiple representation.

  • The registrar’s authority to make information public would be expanded and clarified. For example, this would make it easier for a consumer to confirm the registration status of a person they are dealing with, including more details about their disciplinary history.
  • New regulation-making authority would permit the creation of regulations that would include:
    • * giving consumers more choice in the process used to sell their property, such as what information their representative can disclose to prospective buyers; and
    • * specifying the information that is to be included on various real estate documents such as listing agreements.
New rules for registered real estate brokerages, brokers and salespeople.

New provisions would allow real estate brokers and salespeople to have their remuneration (commission) paid to a corporation that meets certain conditions. Future regulations would outline the conditions and restrictions under which this might take place, to maintain consumer protection and minimize the level of administrative burden on registrants.

  • The use of the term specialist will be restricted to those who have met specific requirements, to be established.
  • Authority would be established to make regulations to clarify the duties, obligations and qualification requirements for brokerages, brokers of record, branch managers and others.

RECO has been advocating REBBA reform and is very supportive of the government’s commitment to substantive reforms. Updating REBBA will ensure that the regulations keep pace with the evolving real estate marketplace.