How will replacing REBBA affect Ontario’s realtors?

by Clayton Jarvis04 Dec 2019

On November 19, Ontario’s Conservative government introduced Bill 145, the Trust in Real Estate Services Act (TRESA), a proposed replacement for the province’s Real Estate and Business Brokers Act (REBBA). After passing second reading on November 25, TRESA appears to be on its way to becoming the new standard to which Ontario’s real estate professionals will be held.

Ontario Real Estate Association CEO Tim Hudak is confident the changes laid out in TRESA will ensure that agents in the province hew more closely to established ethical guidelines.

“Too often in the past, somebody would break the rules egregiously and all they would get was a slap on the wrist,” Hudak explains. “This was not good for consumers and it undermined confidence in the profession.”

TRESA, once passed, will allow the Real Estate Council of Ontario to have more authority in disciplining agents who break the rules, allowing the Council to issue administrative penalties for more modest ethical lapses, levy fines of up to $50,000 for more egregious rule breaking ($100,000 in the case of brokerages), and even suspend an agent’s license, something not permitted by REBBA.

When pressed on the projected effectiveness of TRESA’s administrative penalties, Hudak says the fines will “let RECO take care of minor infractions much more efficiently, and that will free up their resources to concentrate on the worst transgressions. This gives RECO a greater ability to increase fines or suspend and eliminate licenses altogether when needed.”

Under REBBA’s old system of handling complaints, cases were taken to Ontario’s License Appeal Tribunal, an industry-agnostic arbitrator with no specific real estate expertise. TRESA grants RECO the ability to conduct its own investigations and demand more material to support them.

“We’d much prefer a body of respected and experienced realtors and brokers to help administer that penalty rather than people who don’t know anything about real estate,” Hudak says, insisting that the streamlined process will still respect an agent’s right to defend himself. “There’s no doubt there is due process here. It’ll be a more efficient process. With harsher penalties.”

TRESA also allows Ontario’s realtors to incorporate, something already permitted in six other provinces. Consumers may be curious as to how this particular adjustment will help them receive better service. According to Hudak, a trickle-down effect will come into play once realtors are able to invest more heavily in themselves.

“If a realtor has the latest technology, can do more research, can get [their clients] more information quicker, that’s going to improve the quality of service delivery to buyers and sellers.”

RE/MAX LifeStyles Realty agent Ron Antelek, who has been selling in Maple Ridge, British Columbia, since 1989, says incorporating has helped raise industry standards in the province since it became an option for B.C. realtors in 2008.

“I say it has elevated the industry toward it’s goal of always improving professionalism,” he says, stressing that incorporation is hardly a panacea for the industry’s many persistent issues. “It can be good for the agent. It can be good for the consumer. But it’s one of many efforts our board is making.”

The effect TRESA will have on how real estate is bought and sold in Ontario remains to be seen. But Hudak says the early response has been encouraging.

“We’ve had very positive response from our members,” he says. “We did our homework.”

 Assuming the money is getting reinvested; 6 other provinces already have this (BC, Quebec, Manitoba, Saskatchewan, Alberta, NS)

Major transgressions – realtor during an open house started swiping stuff from it; “At the end of the day, his punishment was a lecture and he had to take courses and he swore never to do it again. Our membership went bananas over that, and rightfully so. Now there will be a greater ability to suspend or revoke over serious violations of the rules.”

Formerly, old system took cases to License Appeal Tribunal, which look at issues across all industries, from “real estate, hairstylists or mechanics”;

Streamlined process; RECO can allocate its resources more accordingly; conduct its own investigations and demand more material to support them;

Still an appeal mechanism for realtors who feel as if they were mistreated, can appeal to provincial LAT

“We’ve had very positive response from our members,”

Specialty certifications: “If you’re going to hold yourself out to be a specialist, this will enable the creation of educational requirements, sales levels and experience to back that up. Model of lawyers, law society, were specifics need experience and education to claim that;

Overall effect on the industry: weed out those who are not following the rules, enable consumers to have confidence that they are at the top of their game and held accountable

Under TRESA, realtors claiming to be “specialists” in a particular niche will be forced to undergo specific training and accrue enough relevant experience before they can deem themselves so. This will come as welcome news to any investor who has worked with a pre-construction, waterfront or investment property “expert” and justifiably wondered how that label was earned.

The certification process, at this point, is purely theoretical. “That will take time to get right,” Hudak admits.

In the interest of bringing more transparency to real estate transactions, TRESA will give sellers the option to disclose the offers received during competitive bidding. The potential effects of this particular change are somewhat hazy.

“It gives more choice to consumers,” Hudak says. “Some may feel they just want a transparent process because it fits with their value system. Others may feel that it will get a better price for their home. The bottom line is, it gives consumers an additional tool.”

Hudak feels other aspects of TRESA, such as allowing real estate agents to incorporate and replacing the term “customer” with “self-represented parties” will provide investors better service and more clarity as they navigate the buying and selling processes.

Just how much of an impact the new Act will have on Ontarians’ bottom lines remains to be seen.

  • Customer vs consumer: make the process of multiple representation more transparent; client is now a person a realtor can give advice to, a customer can just receive services; sound the same to the average person; now customers are “self-represented parties”
  • Self-represented – agreement drafts, comp numbers; but no advice or advocacy, just providing info
  • Double-ending still staying as it is; in the sense of consumer freedom;
  • Disclosure of offer amounts – “It gives more choice to consumers.” Specifically an OREA recommendation; practical effect: “Some may feel they just want a transparent process because it fits with their value system. Others may feel that it will get a better price for their home. The bottom line is, it gives consumers an additional tool. But when to use that tool, you really need the advice of your realtor.

Tim Hudak

First time in 20 years the act has been changed

Raising the bar for professional standards and consumers

20,000 individuals sent requests to their MPs calling for positive changes to the homebuying process; “make Ontario a leader in professional standards, ethics and enforcement”

“We did our homework. We consulted with our realtor membership and had over 6,000 participate to say, ‘What do we need to improve when it comes to our framework of legislation?’”

38 recommendations provided to gov’t; “I’m very pleased that the Ford government, with the support of the New Democrats, Liberals and Green Party have enacted almost all of our recommendations.”

Highlights:

Real estate corporations: “Realtors can reinvest in their businesses, hire more people, buy new technology and help serve their clients better.”

Specialty designations to ensure that a realtor who claims they’re a specialist in an area like commercial real estate or waterfront, something will be there to back it up

More tools for the regulator to ensure discipline – doubling the fines, greater ability to suspend or revoke the licenses of the people who break the rules.

For homeowners/buyer:

  • Discipline – greater ability of the discipline committee at RECO to suspend/revoke licenses; “Too often in the past, somebody would break the rules egregiously and all they would get was a slap on the wrist. This was not good for consumers and it undermined confidence in the profession.”
  • Fines were still at 2002 levels; have increased significantly
  • Gives the regulator ability to give administrative monetary penalties for minor offenses; tickets for small violations; get those rule-breakers out of the cue, allowing RECO to concentrate on bigger issues; expects new legislation to put conditions on licenses to ensure good behavior
  • Customer vs consumer: make the process of multiple representation more transparent; client is now a person a realtor can give advice to, a customer can just receive services; sound the same to the average person; now customers are “self-represented parties”
  • Self-represented – agreement drafts, comp numbers; but no advice or advocacy, just providing info
  • Double-ending still staying as it is; in the sense of consumer freedom;
  • Disclosure of offer amounts – “It gives more choice to consumers.” Specifically an OREA recommendation; practical effect: “Some may feel they just want a transparent process because it fits with their value system. Others may feel that it will get a better price for their home. The bottom line is, it gives consumers an additional tool. But when to use that tool, you really need the advice of your realtor.

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