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!