The Trust in Real Estate Services Act, 2002 (TRESA), effective since December 1, 2023, heralds a new era in Ontario's real estate sector. Replacing the Real Estate and Business Brokers Act, 2002 (REBBA), TRESA introduces many changes to enhance consumer protection, transparency, and professional standards in real estate transactions.
The introduction of the Self-Represented Party (SRP) is a significant development. SRPs, individuals not receiving services from a brokerage, can interact with realtors in limited capacities. Realtors can provide general real estate information or assist with mechanics, such as filling out an Agreement of Purchase and Sale, without offering advice or causing the SRP to rely on their judgment or skill.
The optional Designated Representation model allows a brokerage to work with both buyer and seller in a single transaction without entering into Multiple Representation. In this model, the duty owed to clients applies to designated salespersons within a brokerage for specific transactions, not the brokerage as a whole. This model enhances clarity in representation, allowing different salespersons from the same brokerage to represent the interests of the buyer and seller separately.
Another notable change is the mandatory Consumer Information Guide prepared by the Real Estate Council of Ontario (RECO). Realtors are now required to provide this guide to clients and self-represented parties before offering any services. Previously, there was no standardized information guide. This new requirement enhances consumer awareness and sets clear expectations for real estate transactions. However, it also adds an administrative layer for realtors, who must now ensure that every client receives and understands this guide.
TRESA's enhanced disclosure requirements now necessitate written disclosures in clear, concise language, prominently featuring the word "disclosure." This includes material facts, latent defects, conflicts of interest, and the existence of a Seller Property Information Statement (SPIS). Realtors must obtain a written acknowledgment from clients, ensuring they have received and understood these disclosures, and provide them with a copy of the acknowledgment.
Amendments to the disclosure section are not entirely new but expand upon previous obligations. Previously, real estate professionals were required to disclose known facts about a property. TRESA now mandates more explicit and detailed disclosures, including every service and marketing effort, like staging, involved in the transaction. This has caused some confusion among professionals, as it seems to add complexity to pre-existing practices. The key change is the need for clarity and specificity in disclosures, which must be explicitly documented in contracts or Agreement of Purchase and Sale (APS).
The Code of Ethics under TRESA is getting a focused makeover, primarily concentrating on conflicts of interest and confidentiality. Additionally, the RECO discipline committee is empowered to handle allegations of law breaches, not just code of ethics violations. This enhancement in regulatory powers aims to improve accountability and ethical standards in the real estate profession. While this increases the professionalism and integrity of the sector, it could be perceived as an added regulatory burden by some professionals.
A significant shift under TRESA pertains to multiple offer scenarios. Previously, the details of individual offers in such situations were confidential. TRESA introduces a potential shift towards open bidding or auction-style processes. If all parties involved in a multiple offer scenario consent, details of the offers can now be disclosed to other interested parties. This change aims to make bidding more transparent, allowing participants to know who they are outbidding. However, there's ambiguity, as it's not mandatory but optional, leading to a mix of closed and open bidding processes depending on the participants' agreement.
Lastly, TRESA necessitates updates to standard Real Estate forms. OREA is revising existing forms to ensure compliance with the new rules. This update aims to standardize and clarify terminology related to brokerage/consumer relationships and disclosures. This standardization is crucial for legal compliance and consistency in real estate documentation. However, it requires realtors to adapt to new forms and potentially undergo retraining.
In conclusion, TRESA's reforms represent a significant stride towards enhancing trust and reliability in Ontario's real estate services. While these changes offer substantial benefits in terms of consumer protection and ethical standards, they also introduce new challenges and responsibilities for real estate professionals. For more information or assistance in understanding how these changes impact your real estate transactions, feel free to contact Nungisa Law at info@nungisa.com. Our team is dedicated to providing you with comprehensive legal support in this new regulatory environment.