If you're planning to buy or sell a home in Ontario, it's crucial to stay informed about the recent changes in real estate regulations. The Trust in Real Estate Services Act (TRESA) Phase 2, which kicks in effective December 1, 2023, brings significant updates that impact both consumers and real estate professionals.
Let's break it down in simpler terms:
Choosing Your Representation: Multiple and Designated Representation
What's Changed?
Old Way: If a real estate brokerage represented both the seller and the buyer, it was called multiple representation.
New Way: Now, there's an extra step. The brokerage must tell each buyer making an offer if they're also representing the seller. This ensures transparency and that each side (buyer and seller) are represented with no conflict.
What's New?
Designated Representation: This is like having separate guides for the buyer and the seller within the same brokerage. It's designed to give you better, more focused support.
What It Means for You:
- You have more clarity on who is looking out for your interests.
- The real estate process aims to be more transparent.
Self-Represented Party: Understanding the Changes
What's Changed?
Old Term: You might have heard about "customers" in real estate. A customer is someone who interacts with a real estate agent but doesn't have a formal representation agreement. While the agent must still act honestly and fairly, they don't owe the same fiduciary duties to customers as they do to clients. The agent may provide general information but doesn't have the same level of commitment to the customer's best interests.
New Term: Customer is now called a "Self-Represented Party" (SRP). This is someone in a real estate deal who doesn't have their own agent.
What It Means for You:
- If you're not using an agent, you're an SRP.
- You'll get a special form explaining how things work since you're not using an agent.
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Open Offers in Ontario: A Fairer Process
What's Changed?
Old Way: When multiple buyers want the same house, the process isn't always clear. For example, the seller’s agent can only disclose how many offers are registered, but cannot disclose any additional information about competing offers such as the offer amounts, conditions, or any other terms. This causes buyers to bid “blind” in a multiple offer scenario, not knowing the details about any other offers on the table.
New Way: Now, sellers can choose how much info they share about other offers. This is a huge step forward towards open offers, which helps make the process fairer and has been in practice in markets like Australia. Under TRESA, a seller can direct that the contents of competing offers be shared with every person who makes an offer. The seller can choose to disclose as few or as many details of an offer or offers as they choose as long as the information shared is not personal info like the buyer’s name or address. REALTORS® are still required to disclose the number of competing offers to all buyers who submit an offer at the outset of the process.
What It Means for You:
- Sellers can now decide how much they want to reveal about other offers.
- Buyers have a clearer picture of the competition, making the process more fair and transparent.
Written Agreements and Disclosures: Clear Communication
What's Changed?
Old Agreements: Sometimes, the details weren't crystal clear in the paperwork. For example, in the case of a listing agreement, the remuneration payable to any other
Brokerage, the services that the brokerage will provide under the agreement (staging,
photography, etc.), or the terms related to the termination of the agreement.
New Agreements: Now, everything must be super clear, like how much the agent gets paid and what exact services they provide.
What It Means for You:
- You'll get more detailed paperwork, but it's designed to make sure you understand everything.
- It's about making the real estate process smoother and more understandable for you.
What else is new under TRESA?
There are a couple more things being introduced with TRESA to further protect the consumer and regulate Real Estate practices. For example, RECO, the Ontario regulator for Real Estate agents, will have expanded the scope of RECO’s discipline committee to give the regulator the ability to suspend, revoke or apply conditions to a registration. RECO will also have the ability to proactively investigate a registrant’s conduct and refer the matter to the discipline committee whether a formal complaint is made or not.
These changes are meant to empower you with more information and ensure a fair and transparent real estate experience. As you embark on your real estate journey, keep these updates in mind, and feel confident navigating the exciting world of buying or selling a home in Ontario!
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