For the RECOrd - March 2024
Legal corner
Inaccurate listing information leads to $10,000 fine
When representing a seller, Ontario agents are required to take steps to verify information they publish to promote a property, including details relating to property upgrades or renovations. If an agent is unable to confirm the age of any particular element or feature of a property, then dates should not be advertised to avoid providing inaccurate information to prospective buyers. It is expected that an agent would seek copies of receipts or documentation to confirm the work done to understand the scope of the work, when it was done and whether necessary permits were acquired.
In a recent disciplinary matter, an agent promoted that the property had recent upgrades to the kitchen, windows, roof, pool liner, pool heater and pool pump.
Although it was true that the features of the property had previously been upgraded, the upgrades were not “new,” but rather they had been completed several years prior.
The sellers’ agent failed to verify the age of the upgrades and advertised inaccurate information. This caused the buyers to believe that items were newer than they actually were.
The discipline panel found that the seller’s agent failed to conduct appropriate due diligence to confirm the correct age of the upgrades thereby providing inaccurate information to the buyers. For the failure on the part of the seller’s agent, the panel ordered a fine of $10,000 and a requirement to complete two education courses. The panel found that the agent had breached s. 4, 5, 6(1), 21(1) and 38 of the Code of Ethics.
This is one of several discipline cases that reaffirm an agent’s obligation to do necessary due diligence before advertising information about a property.
RECO top complaint categories of 2023
RECO has enhanced its complaint analysis and tracking to identify trends that warrant greater focus.
In 2023, RECO opened 1,720 complaints related to registrants.
The most prevalent subject of complaints is that a registrant was not acting in the best interest of their client. While the frequency of this complaint topic has not increased from prior years, we want to highlight for registrants that it is critical that they clearly understand what often leads to a complaint of this type.
Specific examples of activities that go against the best interest of the client are:
- agents mishandling the offer process;
- agents not disclosing fees or other payments that agents are receiving in relation to the trade;
- agents breaching confidentiality of their client’s information,
- agents not conducting due diligence on behalf of their client, and
- agents putting their own interests ahead of that of their client.
The prevalence of complaints in this category (approximately one in seven) demonstrates a fundamental lack of understanding by some registrants of their obligations to protect and promote the best interests of their client.
Under TRESA, there are specific consumer protection measures and clarification of consumer obligations that RECO expects will, over time, assist in curbing misconduct in this area, but registrant compliance is critical.
What can you do?
Registrants must play their part by ensuring their conduct meets, if not exceeds, legislative and ethical requirements, but you must first understand your obligations.
To ensure you are up to date:
Read all the current RECO bulletins. For fiduciary duties, these three bulletins are especially important:
Complete RECO’s 2024 Update Course: Introduction to TRESA.
At the most fundamental level, you must always place the interests of your clients ahead of your own and to actively promote the best interests of your clients. Leveraging available resources is the best way for you to ensure your business practices comply with the law and successfully represent your clients.
Know your obligations under TRESA
RECO’s 2024 Update Course: Introduction to TRESA, is available to support your understanding of the changes to the law. If you haven’t already done so, complete it now to ensure that you’re compliant with the legislation.
RECO’s course is the only one approved by RECO to provide a complete overview of the changes.
Here’s where you can access the course:
If you have been registered with RECO longer than two years
- Use MyWeb, RECO’s portal for registrants.
- Completing the course fulfills one your continuing education (CE) requirements for 2024.
If you registered with RECO within the last two years
If unregistered brokerage employees need to take the course
"Man in the Middle" scam - protect yourself and your clients
Across Canada, new types of fraud are making the rounds every week. As technology advances and online transactions increase, vigilance against cyber threats is important. Fraudsters are continually developing new ways to illegally obtain and exploit victims’ personal and banking information.
An emerging scam involves intercepting emails to change wire transfer information for the purpose of diverting funds – often referred to as a “Man in the Middle” or “MiTM” scam. Losses can be significant, especially in real estate transactions.
In these situations, the scammers alter email information to include their own account information. The unsuspecting consumer, or brokerage, believing the instructions to send money to be genuine, follow the provided directions and send the deposit or excess funds to a fraudulent account.
Here are some tips to stay safe:
- Verify communications: A brokerage or a consumer can telephone the email sender to verify the account information is correct. While this step may seem inconvenient, it is well worth the effort and crucial to keeping everyone safe. Verifying by phone is an important level of protection since email can be intercepted.
- Risk assessments and access control: Regularly evaluate cybersecurity, enforce strict access policies, use business emails, and keep email encryption and anti-malware updated.
- Employee training: Ensure all employees are trained to recognize phishing scams and follow safe online practices.
- Secure data storage: Use email encryption, firewalls, security scans, and secure data disposal methods. Include method and account info in written consents for electronic money releases.
- Regular security updates: Keep antivirus and firewalls updated, enable two-factor authentication, and change email passwords regularly.
To stay informed and vigilant, regularly review resources such as the Canadian Anti-Fraud Centre (CAFC), Canadian Centre for Cyber Security and the National Association of Realtors' cybersecurity checklist for best practices.
More choice in Ontario real estate education
RECO continues its work towards an expanded roster of approved educational institutions to deliver salesperson and broker education programs, alongside a single exam provider.
The confirmation of approved educational providers is expected in 2024 with program implementation in mid-2025. RECO will continue to provide updates as it completes this important initiative.
The changes will enable RECO to continue maintaining its stringent oversight of education standards, enhancing learner choice, and access to education providers, while protecting the academic integrity of registration education.
Your professional liability insurance renewal begins in July
The professional liability insurance program administered by RECO provides essential protection for you and your clients.
To ensure you receive all important information about this year’s insurance renewal, please be sure that your information – including your email address – is up to date on MyWeb.
All registrants must have professional liability insurance through this program as a requirement of their registration.
RECO's AGM: Additional Q&A
Thank you to those who attended RECO’s AGM on May 30, 2024.
If you were unable to join, a video recording is available on RECO’s website along with answers to all questions posed during the meeting.
RECO signs a Memorandum of Understanding with FINTRAC
RECO has signed a memorandum of understanding (MOU) with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
As Canada's financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor, FINTRAC ensures that entities subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act comply with their obligations under the Act and its regulations. This includes real estate brokerages and agents.
Under the MOU, FINTRAC-related compliance information – subject to FINTRAC and RECO’s respective legislation – will be shared between RECO and FINTRAC, resulting in more coordinated and risk-informed assessments.
RECO and FINTRAC will also collaborate to support outreach with each organization’s stakeholders, such as sharing information with local real estate boards.
This will also help to enhance the knowledge and expertise of each organization regarding new and evolving risks and trends in the real estate sector in Ontario and across Canada.
Sarah Paquet, Director and Chief Executive Officer, Financial Transactions and Reports Analysis Centre of Canada, said the signing is an important step for Ontario.
“We are pleased to work with the Real Estate Council of Ontario to more effectively mitigate money laundering and terrorist activity financing risks in the Ontario and broader Canadian real estate sector. Together, we will strengthen oversight in this sector, reduce duplication and help to protect the safety of Canadians and security of Canada's economy,” she said.
RECO has a continuing education elective course which provides real estate agents and brokerages with critical information about their legal obligations as well as shining a light on potential indicators of money laundering and terrorist financing. The FINTRAC elective covers the three obligations for individual registrants: know-your-client, reporting, and recordkeeping.
FINTRAC obligations aren’t just for real estate agents, and the course also explores a brokerage’s responsibilities as well. To find out more about the elective, log in to your MyWeb account.
RECO's 2023 Annual Report, 2024 Business Plan, and Strategic Plan 2024-26
RECO’s 2023 Annual Report provides a summary of RECO’s work and achievements in 2023.
RECO’s 2024 Business Plan outlines RECO’s objectives for the current year. The 2024 annual report, published prior to the 2025 AGM, will summarize progress against these goals.
RECO’s Strategic Plan 2024-26 outlines its vision to effectively regulate Ontario’s real estate industry to benefit consumers and registrants.
Happy Canada Day
Our office will be closed on Monday, July 1 for the statutory holiday.
