As of December 1, 2023, the legislation governing the activities of registered real estate companies and their agents engaged in the selling of real estate in Ontario has changed. The prior legislation, REBBA, has been replaced with the Trust in Real Estate Services Act, or TRESA.

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is there is now a plain language guide that people buying, selling, or renting real estate receive from their real estate agent. It’s now a requirement that this RECO Information Guide be shared by the real estate agent(s) involved, prior to providing service or assistance to people with a real estate transaction.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you hopefully had a conversation with your agent where they went through the paperwork with you in their own words and answered your questions. While that still can happen, under TRESA, there is now this new information guide that makes things clearer.

Let’s review what the RECO Information Guide covers and what it means. Yes, we’re giving you a plain language interpretation of a plain language guide.

Speak plainly sir!

Under the previous legislation (REBBA), there was an expectation that real estate agents go through all paperwork, whether it be on the buy or sale side, and make sure it was understood by the people signing.

Under TRESA, it is the RECO Information Guide that takes on providing clear, concise, plain language information to help buyers and sellers make informed decisions.

While this doesn’t mean that an agent can’t or shouldn’t explain the documents, it does provide a failsafe of sorts, where a lazy or unethical agent couldn’t skip over explaining certain aspects that they’d prefer not to focus upon.

An agent can fulfill their obligations under TRESA now by:

• Giving a copy of the guide to a prospective client before providing any services to them, or to a self-represented party before any assistance is provided.
• Explain the contents of the guide to the prospective client or self-represented party.

What if I don’t have my own agent for a deal? Do I still get this guide?

As previously discussed in another article, under TRESA, you’re either a Client of a real estate agent or a self-represented party.

Even if you decide not to work with a real estate agent as their client, you will still receive a copy of this information guide. Where the person is a self-represented party, the guide supports conversations about the risks of proceeding without a real estate agent, clarifies that the agent is representing a party on the other side of the transaction and is obligated to act in the best interests of that party, and encourages them to seek independent professional advice before proceeding or receiving any assistance from the agent.

While self-represented parties, by their very nature, aren’t interested in the advice or support of a real estate agent, it is very important that they understand what role the agent will play in the transaction if they decide to not sign up as a client of the agent. As such, a plain language guide to what it means to be self-represented is a tremendous step forward.

What’s in this information guide?

The guide contains five sections:

1. Working with a real estate agent
2. Know the risks of representing yourself
3. Signing a contract with a real estate brokerage
4. Understanding multiple representation
5. How to make a complaint

As the sections are fairly self-explanatory, we’ll just highlight something in each section we thought was worth noting.

In the first section, not only does it explain what your agent can do for you as a buyer or seller, it also clarifies your responsibilities as a client. While some strike us as a bit silly, such as you need to respond to your agent’s questions quickly, others are quite important, such as where you’re expected to share all information that might be relevant to your situation. It’s a simple reminder that sharing information with your agent can avert problems before they happen.

The second section covers the risks of being a self-represented party and while that could be interpreted as one more pitch to come on board as the client of an agent, it is actually more helpful than expected. Sometimes people think that not having their own agent on their side (whether it is buying or selling) means the sole agent works for both parties. This section makes it clear what you’ll need to do on your own if you’re a self-represented party and that’s very helpful.

The third section is all about the contract you are signing with a brokerage as either a buyer or seller and it covers off the key details of the scope of the contract, the services being provided, as well as the payment amount and terms for the services. Finally, it goes over in detail how terminating a contract works, expiry dates and so forth. Given the listing contract or buyer representation agreement is where the most legalese can be found, it’s great to have plain language wording here that says what those documents cover.

The fourth section is focused solely on multiple representation, where an agent represents multiple clients in a transaction. This is different than a client and a self-represented party, as it means actually having multiple clients in the transaction. While we rarely do multiple representation on the Refined team, it is an option that can make sense sometimes, so we’re glad to see it explained very clearly. This section also talks briefly about the open bidding or open offer process, which we reviewed in detail in another article. It feels like this is a strange add-on for this section, but it’s likely because lots of aspects of the open bidding process are still unclear. We’d anticipate that over time, this information guide may include a stand alone section on open bidding and how it works.

The final section is about how to make a complaint about the conduct of a real estate brokerage or agent. Initially we were on the fence about including such a negative topic at the end of a required document, but upon consideration, we are glad it is here. While on our team we hold a high standard of behaviour and address concerns quickly, it is a sad truth that there are some agents and brokerages who make it hard to complain – or have those complaints addressed. This mandatory document including the specific ways to make a complaint could result in better behaviour across the board, and if not, a quicker path to resolution for unhappy clients.

We’ve always spent time on clarifying and explaining real estate documents to our clients, so we’re glad to see that this new RECO Information Guide is following the same approach. If you’re thinking about buying or selling and want some direct answers to your questions, don’t hesitate to get in touch.

As of December 1, 2023, the legislation governing the activities of registered real estate companies and their agents engaged in the selling of real estate in Ontario has changed. The prior legislation, REBBA, has been replaced with the Trust in Real Estate Services Act, or TRESA.

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is that it is now possible to have an open offer process – well, sort of open.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you would have most likely been part of a closed offer process, where if there were multiple parties bidding on a property, only the selling side knew the details of those offers. If you were successful in your bid, did you “overpay” by a little or a lot compared to the other offers? You likely didn’t know the answer to that question and you hoped you managed to get it for just a buck more than the other people.

Let’s review how under TRESA, sellers now have the option of following an open offer process or at least a slightly more open offer process.

Open up!

Let’s start with the basics, namely what is an open offer process?

As the name implies, it means that the Seller can choose to share contents of an offer, as opposed to how it was under the previous legislation, where a Seller (and their agent) were prohibited from sharing the contents of an offer with anyone else. Real estate agents often got into hot water by violating this rule and it no doubt contributed to the perception of unfairness in the offer process.

Here’s the specific provisions in the new legislation (TRESA) about competing offers.

22.7.

(1) If a brokerage that has a seller as a client receives a competing written offer, the brokerage shall,

(a) communicate the number of competing written offers to every person who is making one of the offers; and

(b) if the seller directs, share the substance of the competing written offers with every person who is making one of the offers.

(2) For the purposes of clause (1) (b), a seller may direct that only parts of the competing written offers be shared.

(3) Information shared under clause (1) (b) must not include any personal information of the person making the offer or any other information that would identify the person making the offer.

Let’s break that down shall we?

The bit in Section 1A is the same as it has been for the past twenty years, where the listing brokerage has to notify the number of competing offers to everyone who is part of the bidding war. To be clear, this doesn’t mean to everyone regardless of if they have submitted an offer. While listing brokerages often notify every agent who has shown the property when offers are received, that is more about trying to drum up competition and not a legislative requirement. The only real requirement is that anyone who has submitted an offer is kept in the loop about the number of other competing offers.

It is the wording in Section 1B that is new, where if a seller decides to do so, they can share the substance of the competing offers with everyone who has made an offer.

Section 2 further clarifies that the seller can chose to share only parts of the offers and isn’t obligated to share the full offer or even specifically mandated aspects, such as price, closing date or conditions.

Section 3 then adds in that regardless of what a Seller chooses to share, they can’t share anything that would identify the name of the person making the offer. This also would mean they can’t share anything in the offer that would allow the other parties to figure out who the buyer is, such a condition on the sale of the purchaser’s property located at X address.

So, it’s more open, but maybe not fully open?

The lack of specifics around what may be shared means that we will absolutely see differences between sellers as to what they want to share with the bidding buyers on their home.

One seller may decide he’s only sharing the amount being offered, another seller may decide she wants to share the amount and closing date and another seller may decide they want to share which offers have conditions and which don’t, but that’s it.

Ok, but it’s either closed or open and I’ll know which one, right?

One interesting quirk in this new ability to share some or all parts of competing offers is that there is no actual requirement for the Seller to decide upon and stick with this approach.

A Seller may direct their agent to start with a closed offer process and then change their mind and tell their agent they want to do an open offer and share X aspects of each offer, then change their mind again and say actually they only want to share Y aspects now.

If that sounds confusing, it’s because it is confusing.

Basically, if you’re on the buy side of a deal, you need to be prepared for the seller to choose an offer process that best suits the situation and for it to potentially change.

Consider a situation where the seller notifies buyer agents it will be an open offer process with price and closing date to be shared with all competing buyers.

On offer day, the seller gets three offers and one is a lot more than the other two, so they decide to switch to a closed offer process and give everyone the opportunity to make changes to their offer but not disclose the substance of any of the offers.

Or perhaps one of the offers is firm and the other two are conditional upon financing and the seller decides to switch to a partially open process and rather than sharing the price and closing date, they will not share either of those facts, but they will share that one is firm and two are conditional, in the hopes that the conditional offers decide to remove their conditions or increase their price.

We anticipate that multiple offer situations will be a lot more complicated with these new options and the current lack of specifics for what will be shared amongst competing buyers.

Is there any benefit to buyers?

If the above makes it seem like this is good for sellers but even worse for buyers, it’s not 100% bad news. Some sellers who dislike the blind bidding system and who simply want a “fair” price for their home may reveal all relevant information and allow buyers to make an informed choice.

Buyers who hate the idea of overpaying for a home and effectively bidding against themselves due to not knowing the substance of other offers may choose to only bid on homes where the offer process is open. We have often had buyer clients who refuse to participate in multiple offer situations because they dislike the blind bidding process, so the new legislation at least gives us a slightly expanded pool of properties where they would feel comfortable submitting an offer.

Is this change a good thing?

We’ve largely been in favour of the changes put in place with TRESA, but we’re not sure about this one. It allows sellers to pick and choose between which approach best suits their situation and to change the approach depending on what happens.

The offer process was already a stressful and difficult situation for many buyers and sellers, but at least the rules were clear and a good real estate agent could help get you mentally prepared for what would take place.

Under the new legislation, we’re going to have go through lot more possible scenarios with our clients on both the buy and sell side. While we’re confident we can navigate it to get the best results, it does seem likely that it will cause additional confusion and stress for the parties involved.

If you’re considering buying or selling real estate and want to work with agents who know how the new rules work – and how to protect your best interests – then get in touch!

As of December 1, 2023, the legislation governing the activities of registered real estate companies and their agents engaged in the selling of real estate in Ontario has changed. The prior legislation, REBBA, has been replaced with the Trust in Real Estate Services Act, or TRESA.

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is the changing of how representation works in real estate deals.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you were represented by a brokerage, not a real estate agent. That sounds counter-intuitive, as you would have felt like you had “your” agent and might not have particularly cared which real estate brokerage they worked for as long as you had them on your side.

Let’s review why that common misconception existed and what’s changed under TRESA.

Wait, you mean my agent wasn’t actually my agent?

Under the older legislation, REBBA, all of the paperwork you signed actually had you hiring the brokerage rather than your specific agent. In practice, you knew who you were hiring and who would be working with you, but in principle, it was the brokerage you hired to help you buy or sell, not that specific agent.

This wasn’t particularly relevant if you bought or sold with an agent on the other side from a different brokerage. As long as you were happy with the work “your” agent was doing, it didn’t really matter that the paperwork was actually with the brokerage.

This structure did, however, lead to multiple representation being much more common. This is because if your agent was selling your property and another agent from their brokerage ended up representing the buyer for the property, you were technically in multiple representation. Even though there were two agents involved, they both worked for the same brokerage and both the seller and the buyer had their representation paperwork with that singular brokerage. As such, the brokerage was representing multiple parties and that had to be disclosed and the rules around multiple representation followed.

When a brokerage is in multiple representation, the brokerage and all its agents must now treat each client in an objective and impartial manner, and not provide any advice that might put the interests of one client ahead of the other. This means the two agents involved must not offer advice on matters such as the price or other terms to be included in an offer. It’s fundamentally limiting the benefit and value that each client gets from “their” agent.

How does TRESA fix it?

In the new legislation, TRESA, there is now an option for either brokerage representation (the old way) or designated representation, a new form of representation.

Under designated representation, the agreement remains between the client and the brokerage. One of the key differences between the two forms of representation is who is representing the client.

Under designated representation, the agreement will identify one or more agents as the designated representative for the client. The designated representative is the agent that will provide representation to the client and is responsible for promoting and protecting the best interests of the client. The brokerage and its other agents must treat the client objectively and impartially.

Another key difference relates to access to confidential client information. Under designated representation, the designated representative has a duty to protect the confidential information of the client. This means confidential information, such as the client’s motivation to buy or sell and their financial circumstances, must not be shared with anyone else inside or outside of the brokerage.

Confidential client information cannot be shared with any agent who is not a designated representative for the client.

So, now I’ll always have my own agent now?

Not necessarily! While TRESA allows for designated representation, which we feel is definitely the better model, it’s the brokerage that will decide which type of representation, either brokerage or designated, it prefers to engage in.

The choice is a business decision each brokerage will make. Most brokerages will choose one type of representation. Using both types of representation agreements increases the likelihood that multiple representation will arise. Before entering into an agreement with an agent, check with them to confirm the type of representation agreement you will be signing.

Why did this get changed?

While the specific wording and terms of the older legislation, REBBA, meant that two agents from the same brokerage were legally required to treat two clients in the same transaction under the rules of multiple representation, in practice it often wasn’t followed.

Imagine a situation where you hired an agent to sell your home and it ended up that the best offer (or only offer) came in from an agent who worked at the same brokerage as your agent. How would you feel if when you asked your agent what they thought about the offer, they said “I’m sorry, but I can no longer advise you on that and you need to decide on your own.” We imagine you’d be pretty irritated and not understand why your agent couldn’t continue to advise you and work to get you the best deal just because the other agent is also from their same brokerage.

As a result of this natural conflict between what the agents and their clients expected, plus the reality that each agent could absolutely ethnically represent their client, such technical multiple representation was often treated as if it wasn’t multiple representation. We’d argue it actually wasn’t multiple representation in practice, just technically due to the way REBBA required contracts to be signed.

Is this change a good thing?

Absolutely. We’re thrilled with this change and think it is a great improvement.

Multiple representation is a very challenging thing to do properly and while it can sometimes be the right approach, it made no sense for a seller and buyer to be forced into it just because their individual agents happened to belong to the same brokerage.

By allowing designated representation, with specific agents actually legally being the representative of the client (rather than the brokerage being the representative), multiple representation situations will occur far less often, which is good for buyers and sellers and the industry as a whole.

If you’re considering buying or selling real estate and want to work with agents who understand representation and the new legislation, don’t hesitate to get in touch with us so we can talk!

As of December 1, 2023, the legislation governing the activities of registered real estate companies and their agents engaged in the selling of real estate in Ontario has changed.  The prior legislation, REBBA, has been replaced with the Trust in Real Estate Services Act, or TRESA.

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is the removal of a specific term that caused lots of confusion – the Customer designation.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you were represented by an agent either as a Client or a Customer.  That’s right, consumers were either clients or customers.  Confused yet?  Let’s review how it used to be, how it is now, why they made the change and whether it’s a good thing.

What’s a Client?

When you were a real estate agent’s client it meant that they would:

• Promote and protect your best interests
• Negotiate favourable terms for you
• Maintain confidentiality
• Take reasonable steps to determine and disclose material facts about the property

In the overwhelming majority of cases, when people talk about “working with an agent,” this is the kind of relationship they mean.

So, what’s a Customer?

There is a lesser relationship that used to be able to exist between an individual and a real estate agent, where the person is a Customer. When someone became the Customer of an agent, the agent has a much more restricted role, and their only obligations were:

• Fairness, honesty, and integrity (ethical duty)
• Exercise due care when answering questions and providing information (legal duty)
• Avoid misrepresentation (legal duty)

Examples of what could and could not happen under a Customer Service relationship:

• If the brokerage was representing the Seller, they must disclose anything pertinent about you (the Buyer) to the Seller (e.g., motivations and budget)
• The agent was not obligated to show you all properties that you are interested in
• They would not generally provide you with comparable sold data or price recommendations
• They were not required to perform additional due diligence about the property – they only needed to disclose the material facts that are already known or ought to be known
• The agent may not have disclosed the terms of your offer to any other buyer
• The agent couldn’t lie to you

As you can tell, it was a pretty low bar.  It’s being polite and providing information that must be provided and staying quiet about anything else.

If it also seems like it could be complicated to know when the agent should or shouldn’t tell you something, or what you can rely on them to do, you’re right.  In our experience, most people expect a real estate agent to treat them like a client, even if they’re actually only a customer.

Here’s how it is under TRESA.

Under the new legislation, the Trust in Real Estate Services Act (TRESA), things are a lot clearer.

In any real estate transaction now, a person is either a client or a self-represented party.

A client is any buyer or seller who is receiving services under a representation agreement with a brokerage.  This was true before, but now, under TRESA, that agreement must include representation in respect of the services being provided.

Unlike before, where an agent could treat someone as a customer, and kind of help them, but not fully, with TRESA in effect, you’re either fully a client or you are self-represented.  This means you’re not a client, you have no agreement with a brokerage and you’re not receiving any services or representation.

If someone chooses to be self-represented, it means they have decided not to hire a brokerage for their purchase or sale and they have chosen not to benefit from the services, opinions and advice that a real estate agent can offer.

So, do I need to hire an agent to get any information or help?

Under the new legislation, real estate agents can still provide information or assistance related to a specific property to people who are self-represented.

For example, if we’re listing a property for sale and someone calls us to ask for more information or about seeing the home, we can absolutely still tell them about the property and arrange a time for them to see it.

Any real estate agent that is representing a client of their own and dealing with a self-represented buyer or seller does however have four questions they need to ask themselves to determine if they can provide assistance to the self-represented individual.

1. Is this assistance a service to or incidental to a service to my client and is it consistent with my client’s instructions?
2. Does this assistance benefit my client, and would it promote and protect their best interests?
3. Can I provide this assistance without sharing any opinions or advice with the self-represented party?
4. Can I provide this assistance without encouraging the self-represented party to rely on my knowledge, skill, or judgment?

The first two questions make it clear that if what the agent is doing for a self-represented individual helps their client, they can provide that assistance.  At the same time, the last two questions makes it clear that the agent isn’t going beyond sharing information or undertaking an activity.  If the self-represented individual wants the agent’s opinion or advice, they need to stop being self-represented and sign a client agreement.

Why did this get changed?

The new rules introduce clarity around relationships for sellers, buyers, and agents.

The distinction between being a customer and a client was not an obvious one for consumers, who were generally unfamiliar with the types of relationships permitted and the forms and agreements brokerages use.

Sellers and buyers entering into customer agreements did not always appreciate that clients were in a more favourable position, receiving services and representation. Customers were at risk of relying on an agent for advice when the agent was, in fact, obligated to act in the best interests of a client in the same trade.

Agents were at risk of treating customers like clients, providing opinions and advice in their attempts to be helpful, and creating implied client relationships.

Under TRESA, all buyers and sellers receiving services from a brokerage will benefit from the promotion and protection of their best interests.

Is this a good thing?

Absolutely.  We’re thrilled with this change and think it is a great improvement.

In fact, we were so against Customer representation, that under REBBA, we actually refused to sign anyone up as a Customer.  It wasn’t fair or helpful to those individuals, it meant a greater risk of something going wrong or problems occurring and it made us feel like we were being deceitful.

We’ve always only worked with people as Clients, or not at all, so the fact that the legislation now makes that true for all real estate agents is a fantastic step forward.

If you’re considering buying or selling real estate and want to talk about what we do for our clients, don’t hesitate to get in touch with us so we can help move you forward!