Trust in Real Estate Services Act
If you are a Toronto Real Estate Agent, chances are you’re aware of the changes that took effect on December 1st, 2023 to REBBA. REBBA (Real Estate and Business Brokers Act of Ontario) will be renamed TRESA (Trust in Real Estate Services Act). The name isn’t the only thing changing, Realtors, get ready for a change in policies and paperwork!
As of December 1st, TRESA is entering Phase 2 of the revamp. Phase 1 occurred in October 2020 and focused on the implementation of PREC, which permitted the use of Personal Real Estate Corporations by Toronto Real Estate Agents. There were also some modifications to the titles in which a “real estate salesperson” could refer to themselves. Under REBBA, a REALTOR® was formerly known as a real estate salesperson or real estate broker. With the updated Code, they can also be called a real estate agent or a REALTOR®.
Phase 2 of TRESA is focusing on the following regulations:
- Multiple and Designated Representation
- Self-Represented Party
- Open Offer Process
- Written Agreements and Disclosures
- New Consumer Information Guide
- Code of Ethics
- RECO’s Discipline Process
Multiple and Designated Representation
The Liberal government was pushing to ban Multiple Representation and instead of a ban, OREA has been pushing for Designated Representation since 2017. This model would allow two agents in the same brokerage to represent both buyer and seller in a single transaction. This type of representation isn’t new as it’s been used as a business model in other provinces.
As most know, multiple representation can leave you with your hands tied. Real estate agents are not able to disclose certain things to their clients/customers and this can hold an agent back during negotiations. Designated Representation allows two Toronto real estate agents who work in the same office to FULLY represent their client. The brokerage will be there to ensure all deals are carried out legally and ethically allowing the agents to do right by the client they represent.
A brokerage doesn’t need to choose if they are a multiple representation brokerage or a designated representation brokerage, both options are available on a per-deal basis. However, the type of representation should be decided at the beginning of a transaction. It is the REALTORS® responsibility to ensure they have fully explained the different types of representation by a brokerage to their clients.
Currently, when a real estate agent reps both the buyer and seller in the same transaction, they must disclose this to every other buyer that submits an offer, before acceptance. TRESA has now implemented that each agent receiving the disclosure must provide written acknowledgement that they received the disclosure.
Self-Represented Party
Real estate consumers previously had the option to be a client and or a customer. What it means to be one over the other has left many very confused and TRESA has removed that confusion with the introduction of the Self-Represented Pary. If an individual chooses to rep themself, they will be doing so knowing the risks they are assuming. As REALTORS®, we need to make the advantages of a client-represented party well known. This is not just a name change from Customer, there are several changes under this new type of representation.
Self-represented parties are allowed to receive assistance from a licensed Toronto Real Estate Agent as long as:
- The assistance is a benefit to their client who is part of a transaction
- The assistance doesn’t rely on the real estate agent’s knowledge, skill or judgement
Under TRESA, there are clients or self-represented parties, but no customers. TRESA incorporated this to ensure there are no blurred lines on which person is receiving which service. When a Toronto real estate agent comes into contact with an SRP, the salesperson may in no way advise them in the deal. A self-represented party has no agency or contract with any brokerage which means an agent can speak to the SRP but can provide no advice using their judgement. For example, REALTORS® would be able to provide market stats but would not be allowed to provide insight on the value of a specific property.
An SRP (self-represented party) can receive assistance from a licensed real estate agent once the following has been done:
- An explanation of the SRP documents has been provided by the REALTORS® repping the brokerage
- The SRP has received the RECO information guide and acknowledged it
- The dedicated SRP acknowledgment and consent form has been signed
Open Offer Process
TRESA has introduced an option for sellers to allow the details of competing offers to be shared among buyers. Of course, no personal information can be disclosed that would identify the buyer submitting the offer. Since a seller can change from open to closed or vice versa, it is advised that buyers submitting an offer include a clause that allows them to pull out of the deal based upon this change.
Written Agreements and Disclosures
TRESA has implemented changes to written agreements and has outlined new requirements for disclosures.
OREA’s current Standard Form provides a section for entering the cooperating brokers’ commission. However, the determination of how much remuneration is to be paid to any other brokerage rests with the seller, requiring a discussion between the listing brokerage and the seller.
Written agreements must distinctly delineate the situations in which payable remuneration could be altered. While some listing brokerages have previously decreased their remuneration when the listing agent also represents a buyer, this practice is now prohibited and must be specified as part of the written requirement going forward.
All disclosures that realtors will be making must have the word prominently displayed. OREA standard forms are creating the disclosures on our behalf. Disclosures will be required on the following: the existence of a Seller Property Information Sheet, Multiple representation, material facts, latent defects, and of course any conflicts of interest.
TRESA also requires that all disclosures should use concise language and are to be written clearly. You must have written acknowledgment from your client to confirm they received the disclosure and a copy must be provided.
New Consumer Information Guide
RECO has launched a new consumer information guide which is the only authorized version to share with consumers. Brokerages are NOT allowed to create their own version. The RECO version is the ONLY acceptable version of the guide according to TRESA. Real estate consumers must be provided a copy but there is no requirement that the consumer must sign to say they received the information guide. An interactive system is being worked on to streamline this in the future!
Code of Ethics
The current code of ethics is a gruelling eleven-page document. The revised TRESA Code of Ethics is a two-page document which refines the obligations of a Toronto Real Estate Agent including quality of service, integrity and conflicts of interest.
RECO’s Discipline Process
TRESA aims to hold their REALTOR®’s to the highest standard in North America and crack down on bad agents in the profession. This change has expanded the authority of RECO’s discipline committee allowing them to implement conditions, suspend, or revoke a registrant. Along with investigating an agent’s conduct and whether a formal complaint was made or not.
Take a breath, that was a lot to take in. If you have any questions about the implementation of TRESA, reach out to your Broker of Record or your team lead to help guide you through our new processes.
Sources:
https://www.orea.com/tresa
