As previously noted in my prior post , a new Bill has been put forward to the Ontario Legislature (Bill 145) that is aimed at amending the current Real Estate and Business Brokers Act (REBBA 2002). This is the Provincial law that governs the activities of licensed REALTORS in Ontario. Once passed, the new legislation will be known as the “Trust in Real Estate Services Act, 2002”. As of this post, this revised Act is in the second reading at Queen’s Park and most of us suspect it will in fact be passed into law.
Once passed into law, the “Trust In Real Estate Services Act, 2002” will update and replace legislation that is effectively 20 years old. In my opinion this is long overdue. Having read Bill 145 in its entirety, here is a summary of the key changes.
- REALTORS® in Ontario will now have the ability to incorporate, doctors, lawyers and other professions have this ability now. The ability to incorporate offers some advantages regarding taxation wherein the REALTOR® can be paid through the corporation with the remain funds invested back in their business. This would in turn would allow the ability to better plan and manage income in the real estate business that can be very cyclical and seasonal in nature thus negatively impacting the flow of income and taxes.
Buyer & Seller Relationships
- Sellers will be given the ability at their discretion, to give their REALTOR® permission to disclose the details of competing offers on their properties which is currently not allowed relative to price. This new measure offers benefits to both Sellers and Buyers. If a Seller has multiple offers on their property, they can at their discretion, allow their REALTOR® to disclose the highest price to competing Buyers. Upon knowing what the highest price is, a competing Buyer(s) can make their own decision as to whether they want to participate in the competitive offer process by submitting a higher offer or do they just want to bow it from competing in a process they may not feel comfortable with.
- Multiple Representation is when a Brokerage and their REALTOR® represent both Seller and Buyer clients in the same transaction. Under these circumstances fiduciary duties are due to both parties which requires an element of due car in order that both sides are treated fairly and equitably. It is not clear at this point if a REALTOR® will continue to be allowed to represent both sides but a Brokerage will. Many Brokerages now their their own policy regarding multiple representation allowing it except in situations where there are multiple offers hence the transaction waters can really get murky.
- Consumers are generally surprised when I explain to them that being a “client” versus a “customer” is not one in the same. When representing the interests of a “client”, REALTORS® have a fiduciary duty to look out for the client’s best interests. The same relationship does not exist with someone who is a :customer”. Yes we have to treat them fairly, answer their questions honestly etc. but we are not representing them hence there are no fiduciary duties owed. Under the proposed new law, Sellers and Buyers with either (a) be a client of the REALTOR® or (b) they will be representing themselves perhaps if not on their own perhaps through their lawyer. In this day and age when there are many options for real estate consumers to engage a company that provides only the basic of service relative to selling or buying property, there is an old saying that goes: ” if or when you are representing yourself, you have a fool for a client.” I am sure we will hear more on this once the proposed changes come into law.
The proposed new law will provide for increased fines to REALTORS® and Brokerages that violate the rules including the REBBA 2002 Code of Conduct. For REALTORS, fines will be increased to $50,000 with $100,000 fines applicable to Brokerages. The Real Estate Council of Ontario (RECO) whose investigates both consumer complaints and those made by REALTORS® themselves with be given additional powers to go after the violators. This will ultimately serve to give consumers greater confidence and assurance that both REALTORS® and Brokerages will he held to a higher standard of professional conduct as required under law.
Once the “Trust In Real Estate Services Act, 2002” comes into law more information and clarity will be available for me to share. As always if you have any questions or comments please do not hesitate to Contact Me.