Understanding TRESA 2002: Key Changes and Impacts for Ontario Real Estate Buyers and Sellers
What is TRESA?
TRESA, the Trust in Real Estate Services Act, 2002, is a significant update to Ontario's real estate legislation, formerly REBBA 2002. It aims to enhance consumer protection and modernize the regulatory framework for real estate transactions in Ontario, ensuring better governance of real estate professionals.
Real estate agents provide valuable information, advice, and guidance to buyers and sellers as they navigate the complexities of real estate transactions.
KEY CHANGES:
1. TRESA 2002 allows the consumer to represent themselves in a transaction.
The consumer is referred to as a Self Represented Party (SRP).
Know the risks of Representing Yourself
If you are involved in a real estate transaction and are not a client of a real estate brokerage, you are considered a self-represented party. This means that you have chosen to represent yourself, which has different rights and responsibilities. Very few buyers or sellers make this choice. There are significant risks to representing yourself in a real estate transaction if you do not have the knowledge and expertise required to navigate the transaction on your own. You will be dealing with a seller or buyer who is benefitting from the services, opinions, and advice of an experienced real estate agent. RECO recommends that you seek independent professional advice before you proceed as self-represented party. If you choose not to work with a real estate agent, it will be your responsibility to look after your own best interests and protect yourself. This may include things like:
•making inquiries about zoning, permitted property use, or any other aspect of the property;
•determining what you believe to be the value of the property you are buying or selling;
•determining how much you are willing to offer or accept;
•navigating competing offer situations;
•deciding what terms you want to include in an offer or agreement of purchase and sale; and,
•preparing all documents.
The real estate agent is working for another party in the transaction. It’s important to be aware that the agent has a legal obligation to act in the best interests of the person on the other side of the transaction. If you are a buyer or even just inquiring about the property, for example, and the agent is working for the seller — the agent has a duty to do what's best for their seller client. Be aware that the agent is obligated to share anything you tell them with their client, which might not be in your best interests to tell them, including:
•your motivation for buying or selling the property;
•the minimum or maximum price you are willing to offer or accept; and,
•your preferred terms or conditions for an agreement of purchase and sale.
2. There are now TWO types of Representation in Ontario
Brokerage representation: The brokerage and all its agents represent you and must promote and protect your best interests, but one of the brokerage’s real estate agents may be your primary contact.
Designated representation: One (or more) of the brokerage’s real estate agents is your designated representative.The agent(s) represent(s) you and must promote and protect your best interests.The brokerage and its other agents are required to treat you impartially and objectively. An important aspect of designated representation is that it reduces the likelihood of multiple representation.
Multiple representation requires written disclosure
Multiple representation means a designated representative or brokerage represents more than one client, with competing interests, in the same transaction. This can happen in different ways, depending on the type of representation agreement you and the other clients have with the brokerage.
The brokerage is required to provide you with a written disclosure that explains:
•how the brokerage’s duties or the designated representative’s duties to you will change;
•the differences in the services you will receive; and,
•any change to how much you pay the brokerage.
Until this information is disclosed in writing to all clients in the transaction, and they all agree in writing, the brokerage or designated representative cannot take any further steps on behalf of any of the clients.
You can refuse multiple representation.
If you don’t agree, the brokerage or your designated representative is not allowed to proceed. Ask the brokerage or real estate agent about alternatives to multiple representation. For example, if you are a buyer, the brokerage could refer you to another brokerage or another designated representative to help you make an offer on the property. Agreeing to multiple representation significantly reduces what the brokerage and its agents can do for you, which could have consequences and costs.
3. The Seller can choose to have an Open Offer Process
You may have seen articles in the media about open bidding, or an open offer process. Buyers in Ontario who have made an offer on a property are entitled to know the number of competing offers. Sellers choose how much other information, if any, they want to share about the offers they receive.
If you are a seller:
You decide how much information you want to share about the competing offers.
Your agent will advise you based on the characteristics of your property, market
conditions, the content of the offers you receive and other things.
You need to provide clear written direction to your agent before the content of any offers can be shared. Personal or identifying information contained in offers cannot be shared.
If you are a buyer:
You decide whether you want to participate in a process where the content of your offer might be shared with other buyers.
Your agent can tell you the steps to take to avoid having the content of your offer shared with other buyers.
Be aware that the seller can make the decision to share the content of offers at any time. You may not know in advance.
Impact on Buyers and Sellers:
These changes offer better protection for consumers in real estate transactions. Buyers and sellers will benefit from more transparent dealings, enhanced accountability of agents, and clearer guidelines on representation.
Conclusion and Additional Resources:
Understanding these changes is crucial for anyone involved in buying or selling property in Ontario. For more detailed information, refer to the full document on the RECO website. https://www.recoinfoguide.ca/share-the-consumer-guide/
All information in this post was taken from the RECO Information Guide.
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