Government Introduces Bill to Reform REBBA
The Ontario government has introduced the Trust in Real Estate Services Act, a bill which proposes changes to the Real Estate and Business Brokers Act, 2002 (REBBA). If passed by the legislature, the changes would support and strengthen consumer protection and professionalism in the real estate sector. This is good news for consumers and the profession, as both will benefit from modernized legislation.
The proposed changes follow an invitation to the public to comment on possible changes to REBBA in the spring of 2019, to which many consumers and registrants responded. RECO provided a detailed submission to the government with recommendations across a wide range of topics in support of enhancing REBBA to strengthen consumer protection and clarity to registrants, and to assist RECO in its journey to continually modernize its approach to regulation of the sector. RECO is pleased to see that many of its recommendations are reflected in the bill. You can read RECO’s submission at RECO Submission to Government March 2019.
About the Bill and Proposed Changes
Many of the bill’s proposed changes would enable regulations to be made to deal with specific matters. Other key changes, such as changes to the Discipline Committee’s authority as outlined in the Act itself, will also need supporting regulations before they could take effect. The government has indicated its intention to consult further on new regulations.
You can read about how the bill will proceed at How an Ontario bill becomes law.
The following highlights some of the key proposed changes. RECO will provide further information and explanation as the bill proceeds through the legislative process.
Key Outcomes of Proposed Reforms
A. A modern, efficient and effective regulator
RECO’s regulatory powers would be updated, allowing it to levy financial penalties (administrative penalties) in respect of certain provisions of the Act and regulations, for the purpose of promoting compliance with the Act and regulations. This is something RECO has long advocated.
The Discipline Committee’s powers would be broadened to include the power to impose conditions on registration, suspend a registration, and revoke a registration. This is a key RECO recommendation, which we know the profession also supports. Appeals of all matters decided by the Discipline Committee would be to the Licence Appeal Tribunal rather than an Appeals Committee.
The Registrar’s authority to inquire into conduct and refer a matter to the Discipline Committee would be clarified, including allowing for a referral to the Discipline Committee, whether or not there has been a complaint.
RECO’s registrar would be able to consider a broader range of factors when considering eligibility for registration including the past conduct and past financial position of an applicant.
Provisions would enable regulations to be made to deal with the information that the Registrar can ask a registrant to provide and how it is to be provided. This will support RECO’s ability to gather information necessary to be better informed about the sector and to better inform its risk based approach to enforcement.
B. Enhanced consumer protection
The term “customer” would be removed from the Act, effectively eliminating the customer relationship as currently defined. Instead, the law would clarify whether someone is represented by a brokerage or is self represented. Regulation making authority would permit regulations clarifying the relationship between a registrant, clients, and other persons. RECO believes that such a change would strengthen the effectiveness of the laws around multiple representation.
Provisions would enable regulations to be made to give consumers more choice in the process used to sell their property including for example, what information their representative can disclose to prospective buyers.
Provisions would also enable regulations to be developed to specify the information and disclosures to be provided to consumers. RECO has long promoted the introduction of a robust consumer guide to be provided to consumers to support informed decision making when entering relationships with brokerages.
There would also be authority for regulations to be made specifying the information that is to be included on various real estate documents such as listing agreements.
The Registrar’s authority to make information public would be broadened and clarified. RECO advocated this as an important change that will make it easier for a consumer to confirm that the person they are dealing with is not someone whose registration has been revoked.
C. New rules for registered real estate brokerages, brokers and salespersons
New provisions would allow real estate brokers and salespeople to incorporate to be paid through the corporation. Future regulations will outline the conditions and restrictions under which this might take place, so as to maintain consumer protection and minimize the level of administrative burden on registrants.
The use of the term specialist will be restricted to those who have met specific requirements to be established.
Authority would be established to make regulations to clarify the duties, obligations and qualification requirements for brokerages, brokers of record, branch managers and others.
Broadened regulation making authority regarding the code of ethics for registrants would allow for regulations supporting and strengthening professionalism in the sector. RECO has long supported a strengthened code of ethics.
D. Clarity and precision to support burden reduction
Updated definitions of broker, salesperson, and real estate would be introduced.
The inclusive term “remuneration” would be used in the Act in place of the current expression “commission and other remuneration”.
Questions and Answers
When will the changes happen?
The bill is proposing changes to the Act itself. It has only received First Reading. Next steps will include Second Reading and referral to committee with an opportunity for public input. No changes will take effect until the bill receives Third Reading and is proclaimed in force. New and amended regulations will have to be developed before the changes can take effect. New laws probably won’t come into effect until 2021.
How will someone be able to call themselves a specialist?
The bill is setting out a clear prohibition against someone holding themselves out as a specialist, unless the individual has met specific requirements and conditions that will have to be developed in the regulations. Education programs would also have to be developed in areas where a specialist designation would be identified. Such a prohibition would not prevent someone from trading in those areas, but they could not advertise or hold themselves out as such a specialist.
Why will the Act no longer deal with “customers”?
“Customer” has been used to refer to someone who is not a client of the registrant but has entered a written agreement with a brokerage. However, though not a client, the relationship between a customer and a registrant is not always clear and can confuse consumers and potentially put a registrant at risk if they treat a customer like a client. Clarifying that a consumer is either represented by a brokerage or self represented will more clearly state the nature of the relationship between a registrant and a person they are not representing as a client.
Will I be able to have my remuneration paid to a real estate corporation once I set up a corporation?
The changes will not come into force for some time, which means that until the law is changed and brought into force, brokerages will continue to have to pay remuneration only to brokers and salespeople. Further, the proposed changes would allow for regulations to be made, setting out the conditions and restrictions that would apply before remuneration can be paid to a corporation that you set up.
What are administrative penalties?
As a regulator, RECO works to support compliance with the legislation, using its resources efficiently and effectively. Administrative penalties are a new tool to support compliance. These are financial penalties that can be imposed if a registrant does not comply with certain provisions of the legislation. Administrative penalties tend to apply to sections that impose an explicit duty and it is readily ascertainable whether the requirement has been fulfilled. Examples might include, filing a notice of change within five days or completing trust account reconciliations.
Why will the Appeals Committee disappear?
The Discipline Committee authority would be expanded to include the power to impose conditions on registration and suspend and revoke a registration. It is appropriate for appeals of those orders to be to the Licence Appeal Tribunal (Tribunal) and for efficiency, all orders of the Discipline Committee would be appealable to the Tribunal.