The real estate industry is greeting the government of Ontario’s plan to overhaul its governing legislation with approval and a sense that stakeholders got some, if not all, of their demands met.
The bill, named the Trust in Real Estate Services Act, replaces the existing regulations for realtors last updated in 2002.
“You don’t get every issue you think needs to be addressed, but we’re heading in the right direction,” said Von Palmer, the chief communications and government affairs officer for the Toronto Real Estate Board (TREB).
TREB’s most important issue did find its way into the proposed act: The ability of realtors to personally incorporate. Mr. Palmer said TREB had been “beating that drum since 2005," owing in part to a vocal minority of high-income realtors. “Not everyone will incorporate. Our estimate is maybe 5 per cent of realtors will take advantage of that,” he said. The practice, available to some other professions, could allow high-earning realtors the possibility of spreading out income and tax payments over a number of years.
“All of our major requests seem to have found some home in the new legislation,” said Ontario Real Estate Association chief executive Tim Hudak, who is also the former leader of the Progressive Conservative Party of Ontario. “The two biggest concerns we had when I was brought in, in 2016, have been addressed by this government.” Mr. Hudak and OREA’s concerns about affordability played a key role in shaping the province’s Housing Supply Action Plan, and many of their modernizing suggestions show up in this plan to replace the Real Estate and Business Brokers Act of 2002, which was introduced by Mr. Hudak when he was a minister in a previous PC government.
One area in which Mr. Hudak didn’t get his way might be regarded as technical: Realtors are still officially referred to as salespersons and registrants when OREA has urged they be called “agents” and “licencees” going forward. “The work a realtor does, in helping to buy or sell a home, should be recognized as more than simply a salesperson,” he said, adding the OREA will propose amendments to that effect.
The industry regulator, the Real Estate Council of Ontario (RECO), is to be given the ability to initiate disciplinary hearings, and more power to fine and suspend registrants for bad behaviour.
“We will be able to refer a matter to a disciplinary committee without a complaint,” said Joseph Richer, the registrar of RECO. The delegated authority has until now also had to submit its proposals for licence suspensions or revocations to a separate body, the Licence Appeal Tribunal, a cumbersome process that occasionally leads to extreme outcomes. “It’s almost binary now – revocation or nothing – in which case they may not get any penalty whatsoever when a suspension and a fine might still be appropriate.”
The act will also introduce changes to the industry code of ethics, which Mr. Richer said is narrow to the point where it’s unlike almost any other regulated professional code in the province. Currently, for example, RECO cannot propose disciplinary action for any crimes a realtor might have been convicted for (assault, or non-real estate fraud for example) unless they directly impact on the trade.
Almost no one in the industry seems pleased with a consumer-focused proposal to allow a home-seller to open up the multiple-offer process, allowing a seller to show all incoming bids to prospective buyers.
The province said that issue was one of the most-discussed proposals: Of 144 submissions to the consultation process, 41 per cent mentioned multiple offers (59 per cent of submissions were from realtors, 28 per cent from consumers).
“I don’t like these blind bidding wars, but should an agent be able to shop my offer around on a home? Is that fair and ethical?” said John Pasalis, broker of record with Realosophy. The proposal does not explain when and where a buyer can opt in or opt out of this transparency (currently buyers and sellers must both consent to disclose prices).
“Why does the buyer not have consent rights as well?” Mr. Palmer said. “We need to close the loop on that one … the devil is in the details."
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