Yesterday, Bill 166, Strengthening Protection for Ontario Consumers Act, 2017, passed third reading and received Royal Assent. To help Ontario’s REALTORS® better understand the legislation, OREA has drafted some Frequently Asked Questions (FAQ). If you have any other questions about the REBBA Review and the next steps, please contact the Government Relations team at REBBAReform@orea.com.
1. What is the REBBA Review?
In the Fair Housing Plan, the government committed to a full review of the Real Estate and Business Brokers Act, 2002 (REBBA). The government’s ongoing review of REBBA is being conducted in a phased approached which will raise the bar and increase professional standards.
The first phase focused on multiple representation and mandatory designated representation and has culminated with the introduction of Bill 166, Strengthening Protection for Ontario Consumers Act, 2017. The second phase, scheduled for early spring 2018, will focus on all other aspects of REBBA, 2002.
2. What is Bill 166?
Bill 166, Strengthening Protection for Ontario Consumers Act, 2017 provides the government with the ability to introduce Mandatory Designated Representation (MDR) through regulations. The Bill also increased the maximum fine for Code of Ethics violations to $50,000 for realtors and $100,000 for brokerages.
While Bill 166 is only enabling legislation, which means that all of the details are still to be determined by regulations. The government has signaled their intention to implement MDR with facilitation as the only exemption.
3.What is Mandatory Designated Representation (MDR)?
In short, Mandatory Designated Representation (MDR) only permits a registrant or a REALTOR® to work with one client in a transaction.
4. Are there any exemptions to MDR?
Currently, there are no exemptions to MDR. Although, this could change depending on what arises in the consultation. The only way that a salesperson or broker will be able to work with two clients in a transaction is if a buyer and seller agree to proceed to facilitation after certain conditions have been met. These conditions, which will be determined through regulation, could include written consent etc.
5. What is the facilitation model?
The facilitation model allows a registrant or a REALTOR® to continue working with both parties in a transaction as long as it is in an even-handed manner. The registrant is no longer representing, advocating or advising for either party, but rather, is facilitating a transaction and providing information.
For example, in Alberta, the salesperson can share a comparative market analysis, but can’t instruct or give advice on what price point a buyer or seller should include in their offer. They can present options for clauses, but they can’t offer advice on which ones to include.
However, what’s unique to facilitation is that information received in confidence prior to and during the relationship must also remain confidential.
6. How does the facilitation model work?
In this model, the registrant becomes an impartial facilitator to the trade. The rules and regulations are still to be determined. But, for the purpose of illustrating an example, let’s assume that a registrant has a buyer and a seller, and the buyer is interested in making an offer on their registrant’s listing. The registrant would be required to disclose the conflict to their buyer and then present them with options. The options with a registrant are:
- The registrant can refer them to another designated agent in the brokerage; or,
- They can enter into facilitation.
For example, in Alberta, if the buyer wants to move into the facilitation model, the registrant would take them through the appropriate process and get their signature and consent to move forward.
The offer is then written with the buyer. After which, the designated agent takes the facilitation form and offer to the seller.
Before the offer is presented, the designated agent explains the situation to the seller and gets written permission to proceed with the facilitation model.
If the seller agrees, the offer is presented, if not, the agent returns to the buyer without presenting the offer.
7. Can you explain the difference between facilitation and representation?
When a real estate professional represents a client in a real estate trade, he or she must act in that client’s best interests, including negotiating the best deal for that client and consistently advocating for that client.
In contrast, a real estate professional acting in a facilitation role should be required to act impartially towards all parties in the trade and could not advocate for the best interests of any particular party, nor could he or she provide negotiation advice.
8. A person uses a registrant because they provide advice in the home buying process. Why do you support this proposal if it limits our ability to provide advice?
The proposed facilitation model gives consumers a choice. Through better disclosure and plain, simple language, consumers will better understand the services that they will be getting. If they feel they need a higher level of representation, they can choose to be represented by another registrant.
9. Why is the government not following British Columbia’s proposal of banning multiple representation except in remote areas?
The government’s proposal strikes a balance in achieving both consumer protection and consumer choice. Completely banning the ability to work with two parties in the same trade could have significant implications for registrants, such as those who operate in niche real estate areas that may have specialized business models (e.g., commercial and industrial real estate), or areas with fewer registrants to work with (e.g. remote areas). Consumers trading in these markets may encounter a limited ability to choose who they work with.
10. When will these changes take effect?
With the passage of Bill 166, the increased fines have come into effect immediately. Other changes will not be immediate and require further consultation. However, the government indicated that changes could be introduced by the end of 2019.