Real estate in Ontario has some big changes coming December 1. Here’s a bit about what I know now..
First you should know that rules regarding organized Real Estate in Ontario is governed by the Real Estate Council of Ontario (RECO); and the consumer legislation is called REBBA (The Real Estate and Business Brokers Act) This legislation is from 2002, and is undergoing a huge revamp. The new legislation is called TRESA (Trust in Real Estate Services Act) The revamp is in stages. The first phase allowed Realtors to be incorporated.
It’s important to know that TRESA only governs Realtors – there are other bodies that can trade in real estate; lawyers, private individuals, developers & builders. They are governed otherwise – except for private individuals who are not.
It’s also important to know right now that RECO provides disciplinary oversight to the industry on a consumer complaints-based basis.
Phase 2, coming December 1, has been created to enhance consumer protection, as well as some other industry-specific changes. Here are the biggest changes that I know about. We don’t have the actual legal documentation to look at until December 1 (forms, etc.)
1. Open Bidding. Perhaps the most controversial change is allowing sellers to unilaterally decide if they want to open the bidding process & share offer contents with other buyers. Right now, we are not allowed to do this. This means a seller can choose to share offer contents as long as it’s not private information (like names) amongst other bidders. The very interesting part is that they can pick and choose this information. So we will be able to cherry pick the best price, best closing, most favorable conditions from all of the offers to share with the buyers. There may be provisions for a buyer to opt-out if a seller decides to do this, but without seeing the actual forms/clauses that remains to be seen.
2. Simplified consumer contracts - only represented and unrepresented parties . Right now, we work with consumers under contract. We have a couple of contracts - for each contract we, as realtors, have different obligations to consumers. Moving forward, there will be only consumers under contract and unrepresented consumers. We will not be allowed to provide services to unrepresented consumers unless it benefits a consumer we have already under contract. So this means we can show our listing to an unrepresented consumer, but we can't show them other homes in the area, or provide them with any real estate service or advice.
I personally am looking forward to this one, I am hoping that it will eliminate consumers who refuse to sign a contract, ask for information and research - essentially "using" an agent, only to have their realtor friend write an offer for them. This is likely because they don’t want to ‘bother their friend’, or their friend is giving them a kickback.
With this change will be an 11-page consumer information to explain.
3. More open complaints process at RECO. Right now, any issues with Realtors violating the rules are generally consumer based. RECO is opening this up to a secondary committee to deal with more broad-based issues. With the enormous number of licensed Realtors in Ontario there is a lot of criticism that RECO is too lax with penalties, this sounds like a positive change.
This committee should be able to deal with other issues as well – and hopefully be able to divert some problems back to brokerages to deal with directly.
For example, it will help this home buyer who complained to RECO about the sellers agent in his transaction. Turns out it was the buyer's agent at fault. So the sellers agent had an unfair complaint made, but because the consumer complained (unknowingly) about the wrong agent, RECO can't currently go after the buyer's agent.
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