Levelling the playing field with builders and developers, eliminating unlicensed real estate “consultants” and getting rid of “bully offers” top the list of reforms that the Ontario Real Estate Association (OREA) is recommending to the provincial government.
OREA’s recommendations also include creating an education program for potential real estate professionals that requires more in-class training and specialization in areas like condominiums, industrial and rural or waterfront properties.
OREA says there is currently a two-tier system of consumer protection that exempts builders and developers from having to follow the rules that all real estate salespeople in Ontario must follow when trading in real estate. Real estate auctions, although rare, are also exempt from the protections.
The association is also demanding removal of the grey area in the legislation that allows unlicensed real estate “consultants” to operate in Ontario.
On the topic of bully or pre-emptive offers, “If a home listing includes an offer date, that’s the date on which all offers should be considered; an offer made before that date should not be allowed,” says Karen Cox, OREA president. “This will ensure that all interested buyers of a particular home get a fair shot at making an offer. For sellers, it means they will have a chance to work with their Realtor to carefully and thoughtfully consider all offers without feeling like they are in a pressure cooker.”
The recommendations also suggest eliminating escalation clauses, a provision that a buyer can use to beat competing offers by automatically topping any better offer with a previously stipulated amount.
“A clause that allows a buyer to automatically bump all other offers out of the running in a multiple offer situation makes for a very uneven playing field,” says Cox. “Further, for the escalation clause to kick-in, a Realtor must reveal private financial information such as the highest offer on a home to the buyer using the clause, which violates the Realtor Code of Ethics. Eliminating contradictory rules like this will strengthen consumer confidence in the province’s real estate market.”
In transactions where real estate salespeople are caught breaching the act that regulates real estate in the province, OREA is calling for a process called disgorgement, which would force rule breakers to pay back any income they made by unethical means.
Also among OREA’s recommendations:
- Provide the option for a more transparent offer process.
- Give The Real Estate Council of Ontario (RECO) the authority to proactively investigate the worst offenders and kick people who break the rules out of the profession. When an individual’s license is revoked, implement a “cooling off” period of at least two years before the offending individual can reapply for registration. All applicants with violent criminal convictions or fraudulent convictions defined under Section 380 of the Canadian Criminal Code within the last 10 years should be denied the privilege of working in real estate, with no right of appeal, says OREA.
- RECO should be granted authority to establish administrative monetary penalties, or fines under $2,000, for a range of regulatory violations as an intermediary disciplinary
- Ontario still does not allow salespeople and brokers from operating their businesses through professional corporations. OREA is calling for fair tax treatment for Realtors.
- Amend legislation to permit specialty licensing classes for commercial, agricultural, condominium and other forms of real estate.
- Replace the term “salesperson” with “agent” and replace the term “registrant” with “licensee”.