Trust in Real Estate Services Act, 2019
Today, the government introduced the Trust in Real Estate Services Act, 2019 in the Ontario legislature. If passed by the legislature, it would update the Real Estate and Business Brokers Act, 2002, the legislation that sets out rules that govern Ontario's real estate salespersons, brokers and brokerages. These rules are in place to protect consumers and ensure that real estate professionals and the brokerages that employ them conduct themselves ethically when doing business.
There are over 86,000 registered salespersons, brokers and brokerages in Ontario. They are regulated by the Real Estate Council of Ontario (RECO), an administrative authority responsible for administering and enforcing the act and its regulations.
Details of the Bill
The proposed amendments have five primary goals:
- Improve consumer protection and choice in the market by enabling regulatory changes to:
- Improve the information consumers receive about what a real estate professional and brokerage must do for them (e.g., regulations could require that consumers be provided with a guide about consumer relationships).
- Give consumers more choice in the purchase and sale process by permitting real estate professionals and brokerages to disclose details of competing offers at the seller's choosing.
- Improve professionalism among real estate professionals and brokerages through enhanced ethical requirements for the sector by:
- Enabling regulatory changes to streamline and modernize the code of ethics that real estate professionals and brokerages must follow.
- Update the powers available to the Real Estate Council of Ontario and its Registrar to enhance compliance, address bad conduct and improve regulatory efficiency by:
- Allowing RECO's Registrar to consider a broader range of factors, including past conduct and the public interest, when considering registration eligibility.
- Giving RECO authority to levy financial penalties (also known as administrative penalties) for failure to comply with a legal requirement (e.g., filing a document late) specified in regulations.
- Allowing RECO's discipline committee to consider a broader range of issues and provide it with the authority to revoke or suspend a real estate professional's or brokerage's registration or impose conditions on a registration. Discipline committee decisions may be appealed to the Licence Appeal Tribunal.
- Giving RECO's Registrar authority to require that real estate brokerages and professionals provide data about real estate transactions to support risk-based enforcement.
- Create a stronger business environment by:
- Laying the foundation for allowing real estate professionals to incorporate and be paid through the corporation, while maintaining measures that protect consumers.
- Enabling the creation of a specialist certification program that may be developed by government or by RECO to ensure that real estate brokerages and professionals holding themselves out as specialists in a particular type of real estate (e.g., commercial real estate) are certified as specialists.
- Bring legislation and regulations up-to-date and reduce regulatory burden:
- Simplify brokerage procedures by aligning the time that brokerages must hold unclaimed trust money in various circumstances.
- Update language to make it more consistent with other laws.
From January until March 2019, the ministry consulted with consumers and the real estate industry about the need to update the legislation to address current industry practices and consumer expectations. There were almost 7,000 responses to an online public survey; 39 per cent came from consumers and 61 per cent from real estate professionals.
In addition to the online consultation, people were able to provide more detailed and thorough feedback in response to a formal consultation paper on the regulatory registry. There were 144 submissions in response to the consultation paper; 59 per cent were from real estate professionals, 28 per cent were from consumers and 11 per cent were from organizations. Not all respondents identified themselves.
Some key findings from the regulatory registry responses:
- 42 per cent commented on the rules for multiple offer situations (i.e. when more than one party makes an offer on a property). Most felt that consumers should have the choice about disclosing offer details.
- 21 per cent of real estate professionals clearly supported the ability for real estate professionals to incorporate, with little feedback from consumers on the topic.