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:
- Working with a real estate agent
- Know the risks of representing yourself
- Signing a contract with a real estate brokerage
- Understanding multiple representation
- 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.
