Trust in Real Estate Services Act
If you are a Toronto Real Estate Agare already aware, that on December 1, 2023, TRESA Phase 2 is in effect. The Real Estate and Business Brokers Act of Ontario (REBBA) was renamed the Trust in Real Estate Services Act (TRESA). This will bring about a change in policy, paperwork, representation, and more.
In October 2020, Phase 1 of this revamp was rolled out which focused mainly on PREC (Personal Real Estate Corporations). Some minor changes also occurred during Phase 1 including changing a realtor’s job title to “real estate salesperson” or “real estate broker”. Now, they can be called a real estate agent or a realtor.
December 1st is known as Phase 2 of TRESA. The regulations that this phase focuses on include:
- Written Agreements and Disclosures
- New Consumer Info Guide
- Code of Ethics
- RECO’s Discipline Process
- Multiple and Designated Representation
- Self-Represented Party
- The Open Offer Process
Written Agreements and Disclosures
TRESA is creating changes to written agreements and requires new criteria for disclosures. What does this mean exactly?
Currently, the Ontario Real Estate Association’s (OREA) standard form comes with a section that allows you to enter the cooperating brokers’ commission. How much remuneration to be paid to any other brokerage, however, rests upon the seller. This involves a discussion being had between the listing and selling brokerages.
A written agreement must clearly define any situation where there could be a change in remuneration. In the past, some listing brokerages have decreased their earnings when the listing agent is also the buying agent. Under TRESA, this is now forbidden.
Disclosures that realtors make must be made apparent and OREA standard forms will create the disclosures on behalf of realtors. Disclosures are now mandatory for: Multiple representation, material facts, the existence of a Seller Proper Info Sheet, conflicts of interest, and latent defects.
New Consumer Info Guide
The Real Estate Council of Ontario (RECO) has created a new consumer information guide that is now recognized as the only version that is allowed to be shared with consumers according to TRESA. Brokerages are prohibited from creating their own version. Currently, there is no system to ensure that consumers have received a copy of the guide but they must be provided with one.
Code of Ethics
TRESA has consolidated the Code of Ethics from an eleven-page document to a two-page document. This document outlines the obligations of a Toronto Real Estate Agent such as integrity, conflicts of interest, and quality of service.
RECO’s Discipline Process
It’s important for real estate agents to conduct themselves professionally and respectably and TRESA intends to hold realtors to the highest standards in North America. TRESA has now increased the authority of RECO’s discipline committee. This change allows them to implement conditions, and revoke, or suspend a registrant in addition to being able to investigate a realtor’s conduct despite a formal complaint being made or not.
Multiple and Designated Representation
Designated representation is a business model widely used in other provinces and OREA has been advocating for designated representation since 2017. This would permit two agents within the same brokerage to represent both the seller and buyer during a single transaction. The Liberal government has been pushing to ban multiple representation.
Multiple representation can often leave people feeling defenceless as realtors are unable to disclose certain things to their clients which in turn can limit an agent during negotiations. Designated representation would permit two Toronto real estate agents who work for the same brokerage to represent their client in a full capacity. Ensuring that all deals are conducted legally and ethically would be managed by the brokerage.
There is no need for a brokerage to identify whether they are a multiple representation or a designated representation brokerage as they can choose on a per-deal basis. The type of representation needs to be determined at the start of the transaction though. Explaining the different types of representation to a client is the responsibility of the realtor.
If a realtor is representing both the buyer and seller within the same transaction, they currently must disclose this fact to all buyers who submit an offer. With TRESA, each agent must give written confirmation that they’ve received the disclosure.
Self-Represented Party
Toronto real estate consumers formerly had the choice to be known as a client or a customer. The distinction between a client and customer has been unclear in the past. With TRESA, the confusion has been removed with the new Self-Represented Party. There are clients or self-represented parties, but no customers. If someone chooses to represent themself, they will assume their own risks.
Realtors need to take the opportunity to make the advantages of a self-represented party known. There are several changes that come with this new type of representation aside from just the name change from “customer”. Self-represented parties are permitted to receive help from a licensed Toronto Real Estate Agent under the following parameters:
- The help is beneficial to the client who is part of a transaction
- The help doesn’t depend on the agent’s skills, judgment, or knowledge.
TRESA’s intention of introducing the self-represented party is so there are no blurred lines and it is clear which person is receiving which service. If an agent and a self-representing party make contact, the agent should in no way advise them in the deal. A self-represented party should not have contact with an agency or brokerage so a realtor may speak to them but they can not provide advice that uses their own judgment. As an example, a Toronto real estate agent could give information about market statistics but they would not be permitted to provide input on a specific property value.
Once the below three criteria have been met, a self-represented party (SRP) can receive help from a licensed realtor:
- The SRP has been given the RECO information guide and acknowledge receipt
- An explanation of the SRP documents has been given by the agent representing the brokerage
- The dedicated SRP acknowledgment and consent form has been signed
Open Offer Process
Under TRESA, a new option has been introduced for sellers that permits the sharing of the details of competing offers amongst buyers. No personal or identifying information will be disclosed. A seller can fluctuate between a closed and open offer process as they wish. It would be wise for buyers who submit an offer to include a clause that would allow them to pull out of a deal based upon this change.
Change can be overwhelming and with the introduction of TRESA, there are certainly many, many, changes. If you have any questions or need help navigating these changes, reach out to your Broker of Record or trusted real estate team to help.
If you or someone you know is looking to buy, sell, or invest, our team of Toronto real estate experts is here to help. Feel free to book a no-obligation chat. Book Consultation.
Danielle Demerino
ddemerino@royallepage.ca
416-728-5401
Brittany Huggins
bhuggins@royallepage.ca
