By Mark Weisleder

The long-awaited changes to the real estate agent and brokerage community in Ontario just had its initial release, mostly to positive reviews from the industry. The draft bill to change the Real Estate and Business Brokers Act, 2002 has not yet been approved and contemplates further changes. The new act will be called the Trust in Real Estate Services Act, 2019. Here are the main points you need to know.



1. Real estate agents will be able to incorporate.

The real estate industry has been requesting this for years, so that real estate professionals could enjoy the same tax advantages of other professional groups such as doctors, lawyers and accountants. Incorporation should also provide extra protection from liability. Incorporation is not for everyone and once the rules are clarified, agents must discuss this with their own accountants to make sure that this is right for them. Still, great news.

2. No more customers, you are either a client or you are self-represented.

There has been a lot of confusion over the years in trying to explain to a member of the public as to whether they should become a client or customer of a real estate brokerage and the differences between the two. While there currently is a duty to be fair to customers, there was an extra level of care owed to clients. An agent can give advice to a client, not a customer. This is easier said than done. Under the proposed new rules, you are either a client of the brokerage, or you represent yourself. Makes it much simpler. Remember the old adage, “when you represent yourself, you have a fool for a client.” Applies in just about everything you do.

3. Multiple representation will still be permitted.

This is also great news for the industry. Real estate brokerages will still be able to represent both the buyer and the seller in the same deal. It is not clear whether the same agent will be permitted to act for both the buyer and the seller. This will also have to be reviewed more carefully when further clarification is provided.

4. Sellers may be able to disclose the highest price to a competing buyer.

It appears that in a bidding war, a seller may obtain the option to disclose to one of the other buyers the price that one of the buyers is willing to pay. This is currently not permitted today. Again, the actual language will have to be reviewed to determine the circumstances when this may occur.

5. Penalties are increasing if you break the rules.

It is proposed that fines to real estate agents and brokerages be increased to $50,000 for any agent to $100,000 for the brokerages if you violate the rules, including the REBBA 2002 Code of Ethics. This is just part of the new protections to give the public more assurance that real estate agents and brokerages are held to a higher professional standard.

4 COMMENTS

  1. You are being very brave, Carolyne L., in bringing up some of the MANY questions that are sure to rise. I have remarked many-a-times that, if stiff penalties a professional ‘registrant’ make, KGB’s Russia (CCCP/USSR) would have been the most ethical country in the world! (But, of course, we are holier than those commies)! But seriously, who will write the hierarchy of a newly designed real estate corporation? A lawyer? A civil servant? I think an I.T.guru would be more qualified to design a flow-chart, fire-walls, jurisdictions, permissions, etc.etc. And what costs will be downloaded to our tiny net cheque? The registration fee alone has risen to twenty-times as much (from $56.00 a year in 1987) . Having been a Commissioned Officer (a veteran) and an engineer, I liken this exercise to “Chain-of-Command” concept. Oh no. That sounds too regimented for real estate salespersons. Meanwhile, lawyers would be the happiest campers (save a few), laughing all the way to the bank! I rest my case.

    • Thank you for your comment today, Cummer. If you read the comments other reps make on REM, it is abundantly clear that the buyer’s position in some trading areas is still thought of in sub-agency protocols. In my mind there’s no question about that (philosophical) remark.

      Having got my broker registration/licence in 1990, with a decade of sales rep history behind me and following a hugely successful years long prior business freelance career, in just months following, in 1991 I opened my own boutique real estate Corp. (An oddity at the time.)

      Oddly enough not much different than when agents are often thrown to the wolves as noted (in another recent comment) once they are finished their courses, having been treated the same way and had created an amazing niche market representing a 24% market share in my trading area that I continued to maintain having left a prominent brokerage where I had been for many years and had no intention of leaving, up popped buyer agency in the middle 90’s.

      That’s 25 years ago and itself continues to remain its own mystery anomaly of sorts, either not clearly understood or misunderstood in multiple ways. WHY would that be? How could that possibly be?

      Since more than 90% of my business to date had been representing sellers (under sub-agency) I was a little perturbed to see this new buyer agency in play. I had sat on Board Committees for years and I don’t think I ever missed Board meetings. But there had been no strong talk about this new kid on the block called buyer agency. So personally I was feeling a little like being thrown to the wolves a second time.

      Fortunately for me I had my historical business acumen in my prior to real estate career behind me. So I set about to learn as much as I could about this new breed of cat, so that if and when I was called upon to perform surgical buyer representation I would have at hand the necessary tools to function in this new world order of working for (or with) buyers.

      Nelson de Hoey has been often complimentary in regard to my approach to buyer agency procedures. But these were “my” procedures, set about when there was really no carved in stone operations manual.

      I did it my way, but always followed the rules, such that they were. And apparently was some sort of anomaly yet once again.

      I have stated in other previous comments the shock I learned when a dominant player broker at a TREB meeting announced he had more than enough to do running his business and now I thought he should have on file at his office, “copies of ‘buyer’ contracts?” He didn’t see them as corporate assets needing to be noted on his Balance Sheet along with his valuable listing contracts (tantamount to money in the bank).

      You might have already read my old consumer education articles and if so I apologize, but here they are again, for those who haven’t read.

      http://www.carolyne.com/buyerinfo.html

      http://www.carolyne.com/sellerinfo.html

      Once again, respectfully

      Carolyne L 🍁

  2. Let me repeat as I have often expressed, I am totally apolitical. So none of my words have political intent.

    ITEM 4: Where is it written in law what a seller (or buyer) can be mandated to or not do? by the govt? In regard to the new bill, regarding representation. A sales rep had better get such instruction in writing. Not just signed, but dated and time-stamped if this situation is evolving in the middle of offer presentations.

    Will the new update to current (2002) system at all address fiduciary duty and agency as related to brokerage structure? In particular involving multiple offers within house or related branches?

    There is a current REM article where the author’s bio says he is a partner in the (named) firm as well as being broker of record, and also identified as being one of the top sales reps in the major city. How is unsolicited incoming business distributed among those who frequent the office culture as related in the office cultural article (or those who don’t?) vis a vis fiduciary duty owed to office reps.

    Just an example only: Are all unidentified sign calls, ad calls, or walk-Ins routed to the office manager, as was the prescribed requirement by the manager (not the Corp) at the brokerage I was at for many years before becoming a boutique independent? (29 years ago)

    (Being broker of record does not necessarily equate to being an office manager). And are there any “blocked” geographic areas as in protected territory for agent-farmers? (Or is this topic outside REBBA governance? regarding incorporated sole-reps.)

    REM particular article author Bio says: “… He sells homes and condominiums in the central Toronto market and is consistently ranked in the top one per cent of all real estate salespeople in Toronto.” … (When I was number one Corp agent in all of Western Ontario Region with 3000 reps, I was continually made to prove it, with jealousy being the motivator, ongoing challenge by a Board Committee volunteer, even so my designation was in tiny print under my professional photo.) The Board response was: That IS her proof.

    Not criticizing, just asking if this sort of arrangement (as exists at many brokerages) will be addressed as in … does the brokerage (any brokerage) owe any fiduciary duty and agency to the registered/licenced currently commissioned (remunerated) sales reps working under an existing Corp banner structure? (Perhaps years old contracts never updated… likely will need to be revisited) or does such fall under the Federal Privacy Act? Via CREA? Reps don’t get to see each other’s agreed to brokerage contracts.

    And will current brokerage “systems” with existing “contracts” (with no exit strategy or expiration date) continue to be honoured when sales reps physically incorporate…

    Will buyer agents invoice the newly “incorporated” listing sales rep, or continue to invoice the mothership brokerage? (grandfathered existing contract to stay in place?). How will individual sales rep incorporation work under the new Bill? I don’t see it addressed in the material that Jim Adair so kindly provided.

    Will licenced/registered “commissioned” (remunerated) sales reps being allowed to incorporate mean each of said reps be deemed to be a quasi brokerage? (Point of reference – teams working under the newly incorporated sales rep. Will the team members in turn be independent subset contractor status (only a CRA term?) Or will the newly incorporated sales reps require new contracts under the umbrella of the new sales rep incorporation system? Maybe I missed it but I don’t recall seeing that in order to incorporate as an individual that the rep must already be an existing licenced/registered “broker” or just a sales rep.

    The ministerial team putting the new process into place in law – have any of them actually worked out on the road (in the field) in the industry itself so to speak, doing real estate business directly with the public? Is their area knowledge at law historically supported by a background in real estate? Or does their area of expertness weigh in at the textbook arena.

    Sometimes legal instructions aren’t always practical in day to day life but clearly must be followed once made law (such as the proposed opening up of contractual buyer information).

    Can the government legislate what a buyer or seller is permitted to do? or not?

    And what does the current ministerial “process” actually do to protect the consumer – buyer or seller, vis a vis the Privacy Act, provincial or federal, as regards buyer participant names, addresses, all in full view on an Agreement of Purchase and Sale document commonly referred to as “an offer?”

    Part of the issue sometimes is interpretation of a law. Especially where the press often relays a different interpretation than does a division of the in-house brokerage apparatus.

    Always more questions than answers because each situation stands on its own two legs. But sometimes interpretation seems to be likened to the story of the house built on sand or one on unsupported stilts over water. A little wobbly.

    Agents, sales reps, brokerages, commissioned or otherwise doesn’t necessarily only refer to money (remuneration), as in how they are paid). The term commissioned can mean “engaged,” as in being commissioned to perform a contract, even a work of art (not semantics, just something to think about). An artist can be commissioned to provide a piece of artwork. The related contract will provide the required details.

    Should licensing/registration in all provinces require production of proof of being a Canadian citizen? and or a SIN number recognized by CRA, seeing as how any version of a defined sales rep can only be paid to/from a brokerage direct to the rep, not to an arrangement to pay cash to a rep family member? Likewise payments of referral fees from mortgage brokers…

    Respectfully
    Carolyne L 🍁

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