For your clients, buying or selling a home can be a huge decision and can make people anxious. Beyond all the fundamental practical skills that a real estate agent can offer clients, they can also provide something genuinely priceless: peace of mind. Clients want an agent they can trust to help them make crucial decisions.
Any agent will tell you that being professional and trustworthy are vital aspects of the job. Still, with such an important business, there needs to be more in place than just trust to ensure that businesses are operating to a certain standard and protect consumers.
That's where the trust in Real Estate Services Act (TRESA) comes in. This act governs how real estate businesses in Ontario must operate and the rights of both professionals and clients. For both professionals and consumers, understanding the law can be crucial to make sure that you can benefit from its protections, as well as to avoid penalties for violating the rules.
What is the “trust” in the Real Estate Services Act?
The “trust” in the Real Estate Services Act, also known as TRESA, or Bill 145, is a piece of legislation in Ontario that outlines the rules and regulations that real estate agents and brokers must abide by.
TRESA covers matters such as the requirement for registration to trade in real estate, standards of practice, discipline for misconduct, the powers of the Real Estate Council of Ontario (RECO), and more. The act also lays out essential consumer protections and provisions to improve consumer choice.
The rules laid out in TRESA are administered by RECO, which is the regulatory body responsible for certifying agents, real estate brokers, and real estate businesses in the province. RECO, along with the Ontario Real Estate Association (OREA), also plays important roles in helping lawmakers, such as the ministry of government and consumer services to shape the bill before it goes into law by providing necessary industry experience.
The bill builds upon previous acts governing the real estate industry and is, to date, the most current legislation in the field.
The history of real estate legislation in Ontario
There have been numerous pieces of legislation that regulate the real estate sector in Ontario – as far back as 1930. Prior to the trust in TRESA, the most recent legislation was known as the Real Estate and Business Brokers Act, 2002 (REBBA).
In the years since REBBA was passed, many in the real estate industry thought that more could be done to improve the legislation in the province. Some felt there was a need to modernize the real estate laws in Ontario, not just to bring them up to standard with laws in other cities and around the world, but also to help Ontario move forward to become a leader in the field. TRESA is the result of many years of research, consultation, proposals and feedback by lawmakers and the real estate industry.
The regulations laid out in TRESA had a few specific goals in mind. Firstly, they wanted to improve the business environment of real estate in Ontario by updating standards and codes of ethics, as well as increasing enforcement powers. They also wanted to increase consumer protections and improve consumers' choices on how they want to buy and sell, as well as what information is accessible to them.
The trust in TRESA received royal assent in March of 2020. However, the changes as a result of the new bill will take some time to be fully implemented. Currently, the province is implementing the changes in TRESA 2020 in a phased approach. Most recently, the second phase of changes has been or is in the process of being implemented.
What TRESA means for you
Whether you work in real estate as an agent or a broker or you’re on the client-side and trying to buy or sell a house, TRESA will affect you. In this section, we will go over some of the important new regulations that apply to either side of the field. Due to the phased rollout of these new changes, not all will necessarily be in place right away, though they will become more concrete over the next couple of years.
Personal Real Estate Corporations
One of the most important new changes in RESA is new legislation allowing an agent to form a Personal Real Estate Corporation (PREC). With a PREC, a broker or agent can incorporate their real estate business as its own legal entity, separate from themselves and their brokerage.
This allows real estate businesses to be more regulated and also provides operators with important benefits. For example, with a PREC an agent can have access to business tax exemptions, which can help a lot on the financial side. Overall, PRECs is a very powerful tool for agents, though they can also be complicated. See the OREA FAQ on forming a PREC for more information.
The bill also added legislation that will allow for real estate agents to receive a specialist certification when they meet certain criteria. Specialist certifications can provide an agent with new business opportunities and can be a great way to expand your knowledge and your business. These specializations could focus on areas like commercial real estate or international real estate. The act also makes the criteria for attaining such a specification more strict, meaning those who have such certifications are as qualified as they say they are.
Increased powers for RECO and discipline measures
TRESA also increased the powers of RECO and its discipline committee to be able to uphold professional standards in the industry and to improve compliance by issuing administrative penalties and punishments. This allows RECO to address and correct issues across the industry more effectively and efficiently which will overall improve the quality of service and compliance. For those working in the industry, it’s as important as ever to remain in compliance and you should be familiar with your duty to your clients and business rules to avoid finding yourself on the wrong side of the law.
The TRESA 2020 act is not just for real estate agents. After all, what is a salesperson without clients to work with? A couple of the changes mentioned above such as an updated code of ethics and specialist certifications for agents are good for consumers as they improve the overall quality of service and the confidence that consumers can have in the real estate professionals they work with. Here are some of the other ways that TRESA impacts consumers:
More transparent offers
In the past, agents were not allowed to disclose information about competing offers. Under new regulations in TRESA, with the permission of the seller, this information can now be shared. This can help cool down bidding wars and prevent buyers from overpaying for homes.
The matter of multiple representations was raised during the formation of the act with a potential ban on the table, though ultimately the practice is still allowed. OREA pushed the province not to instate a ban on multiple representations outright, arguing it would hurt consumers' ability to buy and sell, especially in more remote or rural areas. Instead, they are looking into new regulations for disclosures sounding multiple representations.
Keeping up to date with legislative changes and making your voice heard
As with any piece of law, not everyone will agree with the provision laid out in TRESA. Luckily for you, our legislation is not set in stone but is a continuous process of finding the ideal rules we can all be happy with. It’s important for an agent to keep up with new legislation to understand how these laws affect them personally, but also so that they can question the laws and help to make necessary changes if needed.
As a real estate professional, you should have some say in how the laws that affect you get written. Organizations like RECO, OREA, or CREA, who represent real estate salespeople to lawmakers, can help you to make your voice heard in future changes to the law. Often a call will be made for public opinions prior to an act being passed and this can be a great time to get involved and help influence the future of the real estate industry.
Overall, the TRESA 2020 act was a much-needed update to legislation that provides many useful new provisions for both real estate professionals and consumers. Both sides should endeavour to be at least somewhat aware of new changes as they are put in place in order to make the most of the benefits and to remain compliant with regulations.