This article was submitted by Tania Artenosi, President of the Ontario Real Estate Association, Canada’s largest provincial real estate industry association.
Buying a home is the biggest financial transaction of many people’s lives and deserves the expertise of a real estate professional that you like and trust. The Government of Ontario recently announced legislation that enables you to work with someone who has your best interest at heart and can guide you through the most complex processes.
For years, the Ontario Real Estate Association (OREA) has worked with the Government of Ontario to ensure that Ontario REALTORS® are North American leaders when it comes to professional standards, ethics, educational training, and modern business tools. Our advocacy work led to a big win in 2020, with the passage of the Trust in Real Estate Services Act (TRESA), replacing the decades-old Real Estate and Business Brokers Act (REBBA).
Since its passage, OREA and other industry partners such as the Real Estate Council of Ontario (RECO), have been working with the provincial government to develop and implement regulations that align with our goal of establishing the highest standards of professionalism and ethics in real estate. The Ministry of Public and Business Service Delivery recently released its regulations for Phase 2 of TRESA, and OREA is happy to share that the government listened to our advice and is going to permit Designated Representation.
By way of background, OREA has been calling on the provincial government since 2017 to allow for an additional representation relationship between real estate professionals and consumers. Commonly known as designated representation, this takes consumer protection and choice to the next level, giving buyers and sellers increased confidence when making the largest financial transaction of their lives.
Currently in Ontario, all listing and buyer representation agreements are with a brokerage, not an individual REALTOR®. When a single brokerage is working with multiple clients in a single transaction, it is known as multiple representation. In this arrangement, the brokerage is neutral, which means that services provided during a multiple representation transaction are limited as there will be certain details that the listing brokerage cannot disclose.
In this scenario, in order to proceed, all parties must provide written consent to the brokerage acknowledging that they are participating in a multiple representation transaction. Without consent from both parties, one client would have to find another real estate brokerage to work with.
Ontario’s home buyers and sellers want to work with a real estate professional they like and trust; someone who has their best interests at heart when searching for a great place to call home. The inclusion of designated representation will dramatically strengthen TRESA, highlighting the importance of consumer choice in real estate, and is a big win for Ontario’s consumers and REALTORS®.
Designated representation is practiced successfully in other provinces and is fundamentally different from the current common law practice. In designated representation, although the service agreement is with the brokerage, the agency and fiduciary relationship is between the designated real estate professional(s), not the brokerage, and the consumer.
Another significant difference in a common law brokerage is that the law deems that all persons in the brokerage have the same knowledge about the clients of the brokerage. In a designated agent brokerage, designated agents do not share information with the brokerage or with the designated agents representing other buyers or sellers. Clear documentation, agreed to by the brokerage, the designated agent(s), and the consumer is necessary for such a fundamental departure from common law brokerage practice.
In layman’s terms, this means you can work with the REALTOR® of your choice, advising and advocating for you, whenever you want. These benefits are paramount when dealing with your life savings and your family’s biggest financial nest egg.
Unlike other provinces which implemented a similar model, brokerages will not need to pick one agency model over the other. OREA was successful in getting the Government of Ontario to allow brokerages to use both types of representation on a transaction-by-transaction basis. We are in the process of updating OREA Standard Forms to reflect these changes.
OREA is committed to working with RECO, the Ontario Government, and other industry partners on the ongoing introduction of supporting regulations. As we continue this important work, we will keep Members and Board Leaders updated at www.orea.com/TRESA.