If passed, new act would give greater transparency but some experts think it doesn’t go far enough
It’s a common scenario among home buyers: You put in a bid along with multiple bidders, only to find out you’re not the highest. You have to meet or exceed the highest bid, but you have no idea what that mystery number is. So do you up your bid by $100 or $100,000?
Bidding blindly is a common frustration among home buyers that the proposed Trust in Real Estate Services Act, which was introduced in the Ontario Legislature in November, is meant to address. If passed, it would update the Real Estate and Business Brokers Act of 2002, which sets out rules that govern the province’s real estate salespersons, brokers and brokerages.
The idea is to provide greater transparency and protection to consumers, as well as “give consumers more choice in the purchase and sale process by permitting real estate professionals and brokerages to disclose details of competing offers at the seller’s choosing,” according to the Ontario government.
There are two aspects to this legislation, says Mark Baker, principal at boutique law firm Baker & Company. One is that the province is “willing to regulate the real estate services industry, and it’s willing to do so from the perspective of consumer protection,” he says.
But it will also give the vendor a choice of whether they want to disclose the value of the other bids in a multiple-bid situation. It’s a choice, not a requirement.
“That takes the starch out of this consumer protection,” Baker says. “What vendor would find it to his advantage to disclose this information?”
While it’s a start, he believes the proposed legislation doesn’t have enough teeth.
“Parts of it are forward-thinking and modernize the regulation of realtors,” he says. “It’s great that they’ve polished up the old statute and added some tools for governance … but I think this doesn’t go far enough.”
It would also update the powers available to the Real Estate Council of Ontario (RECO) and its Registrar. RECO is the administrative authority that enforces the Real Estate and Business Brokers Act, and the proposed legislation would give RECO authority to levy financial penalties for non-compliance or unethical conduct.
“We have an incredibly robust real estate industry in Toronto. It’s probably the No. 1 industry in this country let alone the province,” says Janice Fox, broker of record with Hazelton Real Estate Inc.
The Greater Toronto Area has seen an exponential increase in the number of real estate professionals; there are more than 86,000 registered salespersons, brokers and brokerages in Ontario regulated by RECO.
“How do you regulate [that many] people? There are some brokerages that have so many salespeople who are licensed but have very little supervision,” Fox says. “I think sometimes it’s hard to make sure they’re acting in the consumers’ best interests.”
It’s something she believes RECO is attempting to address with the proposed legislation.
It would also clarify some of the qualifications and duties for brokers and brokerages, along with increasing disciplinary action against those who behave in ways considered unethical.
“There’s always a big concern about one brokerage representing both sides of the transaction,” Fox says. This is particularly confusing for consumers buying pre-construction, since brokers are also often representing the developer, so consumers don’t know whose interests they’re representing.
The proposed legislation would make that much more transparent. “That’s the biggest change to the act,” Fox says, “and that disclosure will be included in all real estate documents and written in plain language.”
This content was produced by The Globe and Mail’s Globe Content Studio, in consultation with an advertiser. The Globe’s editorial department was not involved in its creation.