TRESA Explained

The definition of customer, along with the related provisions in the legislation, are removed. This means that a party to a trade will be either a client or a self-represented party. Self-represented party does not replace customer. Services can only be provided to clients.

Under TRESA, customer agreements cannot be entered into, amended, or extended. Existing customer agreements, regardless of the end date in the agreement, will automatically expire 120 days after TRESA comes into force.

Under TRESA, a “client” is a person receiving services, including representation, under a representation agreement with a brokerage. “Representation agreement” means any agreement between a brokerage and a person to provide services, including representation, in respect of a trade.

Services, opinions, and advice can only be provided to clients. Regardless of the scope of the services being provided, even when an agreement is limited to preparing an offer, the person will be a “client” and the agreement will be a “representation agreement” as those terms are defined in the legislation.

Any person receiving services under an agreement with a brokerage in respect of a trade is owed the duties and obligations owed to clients under TRESA.

Related information:

• • General regulation, subsection 1(1), definitions of “client” and “representation agreement”

A self-represented party is a party who is not a client of a brokerage with respect to a trade. This means the person has chosen not to receive services from a registrant and chosen to represent themselves in the trade. Some individuals have chosen to do that over the years, but are now being recognized in the legislation for greater clarity around how registrants are to deal with them.

Under TRESA, registrants are prohibited from providing services, opinions, or advice to a self-represented party. Registrants are permitted to provide assistance to a self-represented party, in respect of a trade, after the registrant provides both the mandatory RECO Information Guide, and the mandatory RECO Information and Disclosure to Self-Represented Party form, to the self-represented party.

To avoid creating an implied representation agreement, any assistance a registrant might provide to a self-represented party must:

• • be a service, or incidental to a service, provided to the registrant’s client,
  • promote and protect the best interests of the registrant’s client,
  • not include advice or opinions, and
  • not encourage the self-represented party to rely on the registrant’s knowledge, skill, or judgment.

Registrants are not obligated to provide any assistance to a self-represented party. Any assistance provided is a service to the registrant’s client and would fall under the representation agreement with the client.

Related information:

• • TRESA subsection 1(1) definition of self-represented party
  • General regulation subsection 1(5) for prescribed criterion
  • General regulation subsection 1(6) for exceptions to implied representation agreements
  • Code of Ethics regulation section 10 (Dealings with self-represented parties)

Under TRESA, a registrant must provide the RECO Information Guide to a potential client prior to entering an agreement with or providing any services to the client. This new obligation replaces what is in section 10 of the Code of Ethics regulation under REBBA (information that must be provided to a buyer or seller before entering into an agreement with them).

The RECO Information Guide must also be provided to a self-represented party prior to providing any assistance to the self-represented party.

Salespersons must also explain the contents of the guide before providing any services or assistance.

Related information:

• • General regulation section 13 (Information guide)
  • General regulation section 13.1 (Information to self-represented parties)

New requirements related to the contents of representation agreements with clients are introduced.

Currently, an agreement with a client must include the amount the client agrees to pay to the brokerage and, in the case of an agreement with a seller, the amount the client agrees to pay to another brokerage involved in the transaction. Agreements must also clearly, comprehensibly, and prominently, set out the required information.

Under TRESA, representation agreements must identify any circumstances in which the remuneration amounts payable might change and, for each circumstance, an explanation of how the amount might change, and an indication of whether one or more brokerages may receive remuneration.

The existing requirement to include a description of the services to be provided under the agreement continues.

Related information:

• • General regulation section 13.4 (Contents of written agreements)

Under TRESA, new requirements apply to all mandatory disclosures, consents, and acknowledgements. They must be:

• • written in plain language that is clear and concise,
  • presented in a manner that brings to the recipient’s attention the information that is required to be conveyed, and
  • disclosures must be identified by the prominent placement of the word “disclosure”

The purpose of the new requirements is to promote clarity in communications. Clear communication supports informed decisions and enhances consumer protection and demonstrates professionalism.

Related information:

• General regulation section 2.2 (Disclosures, etc.)

Brokerages continue to be prohibited from representing more than one client in a trade, unless the required written disclosure is made and, after the disclosure is received, each of the existing or prospective clients consents to multiple representation.

Under TRESA, the required disclosure must include the following information:

• • The fact that the brokerage is proposing to represent more than one client in the trade.
  • The differences between the duties and obligations the brokerage would have if it represents only one client in respect of the trade and the brokerage’s duties and obligations if it represents more than one client in respect of the trade. More specifically, differences relating to:
    • • the obligations and duties the brokerage would owe to the client
      • the services the brokerage would provide to the client, and
      • the remuneration arrangements.

Related information:

• General regulation section 22 (Multiple representation)
• General regulation section 2.2 (Disclosures, etc.)

Under TRESA, if the seller client directs, the registrant is permitted to share the content of competing written offers with every person who is making one of the offers. The seller may also direct that only parts of the offers be shared. Any offer information that is shared must not include any personal or identifying information.

Registrants must follow the instructions of their seller client, including any change in the instructions.

For example, a seller client may instruct their registrant to share the content of offers and a few days later, change their mind and instruct their registrant not to share the information.

A registrant representing a buyer client should advise their client that a seller may or may not decide to share the content of offers submitted before their client makes an offer.

A registrant should also advise their buyer client that the seller is at liberty to change their mind about sharing offer information.

Related information:

• General regulation section 22.7 (Competing offers)
• General regulation section 2.2 (Disclosures, etc.)

Under TRESA, there is a new obligation for a registrant to advise a client to consider the impact of material facts on their decision to acquire or dispose of an interest in real estate. This is in addition to a registrant’s existing obligations to:

• • take reasonable steps to determine the material facts relating to the acquisition or disposition of an interest in real estate, and
  • disclose the material facts to the client as soon as possible after the determination.

Related information:

• General regulation section 22.1 (Material facts)
• General regulation section 2.2 (Disclosures, etc.)

Under TRESA, a new obligation is introduced that requires a registrant representing a seller to disclose facts to a potential buyer, if those facts are known to the registrant and they are facts that a seller client is legally required to disclose. These are facts that would make a property uninhabitable, dangerous or potentially dangerous.

Related information:

• General regulation section 22.2 (Disclosure of facts by seller’s broker or salesperson)
• General regulation section 2.2 (Disclosures, etc.)

The existing obligation on a registrant to disclose to their client, the existence of specific property interests and related information that they, their personal real estate corporation (PREC), or a person related to them or their PREC, may have in the real estate that is the subject of a trade, is continued.

Under TRESA, the disclosure obligation is broadened to the registrant’s client and every person making or receiving an offer.

Related information:

• General regulation section 22.9 (Disclosure of interest)
• General regulation section 2.2 (Disclosures, etc.)

Specific content requirements for the mandatory disclosure about financial benefit are introduced. Under TRESA, the disclosure must include:

• A description of the financial benefit, including:
• an indication of whether the financial benefit is direct or indirect
• an estimate of the value of the financial benefit
• a description of the conditions, if any, under which the financial benefit would be provided.
• A description of the relationship between the person who might provide the financial benefit, and the registrant or, if applicable, the person related to the registrant
• An indication of whether the registrant might receive the financial benefit or, if a person other than the registrant might receive the financial benefit, an indication of that fact and a description of the relationship between that person and the registrant

Related information:

• General regulation section 23.1 (Disclosure of financial benefit)
• General regulation section 2.2 (Disclosures, etc.)

The new Code of Ethics regulation includes amended and new provisions. Many provisions of the Code of Ethics regulation under REBBA have been moved to other regulations under TRESA, some with and some without amendments. Of particular note, the new Code of Ethics regulation introduces provisions related to conflicts of interest, confidentiality, and obstructing or attempting to obstruct the administration of the legislation.

Related information:

• • Code of Ethics regulation (O. Reg. 365/22)

The new Code of Ethics regulation introduces a requirement to disclose an existing or potential conflict of interest. Under the new Code, registrants are prohibited from providing or continuing to provide services to a client or prospective client, where the interests of the registrant conflict or may conflict with the interests of the client, unless the registrant has:

• • made the required disclosure,
  • advised the client or prospective client to seek independent professional advice with respect to the disclosure,
  • taken all reasonable steps to ensure that the client or prospective client understands the conflict or potential conflict of interest, and
  • obtained written consent from the client or prospective client to the provision of the registrant’s services despite the conflict or potential conflict of interest

Related information:

• Code of Ethics regulation section 13 (Conflicts)
• General regulation section 2.2 (Disclosures, etc.)

The new Code of Ethics regulation explicitly prohibits a registrant from obstructing or attempting to obstruct the administration or attempted administration of the legislation.

Under the new Code, registrants must not obstruct or attempt to obstruct any person from making a complaint to RECO or obstruct or attempt to obstruct RECO from receiving accurate or complete information. Registrants must not induce or attempt to induce a person to withdraw a complaint made to RECO about the registrant.

Registrants may continue to engage in mediation, settlement discussions, negotiation, or arbitration to resolve a dispute, but any agreement to resolve a dispute must not include a requirement to withdraw, or refrain from making, a complaint made to RECO.

Related information:

• Code of Ethics regulation section 15 (No obstruction)

Under TRESA, registrants must not provide any person with access to real estate unless:

• • a registrant is present with the person, or
  • the owner of the real estate has consented in writing to the person having access without a registrant being present.

Related information:

• General regulation section 22.5 (Protection of property)

The scope of authority of the Discipline Committee will be broadened. The Discipline Committee will have authority to deal with allegations of contraventions of TRESA and all the regulations, not just the Code of Ethics regulation.

New powers of the Discipline Committee include the authority to:

• • apply conditions to a registration,
  • suspend a registration, and
  • revoke a registration if, in the committee’s opinion, the registrant is not entitled to registration under section 10 of the Act.

Allegations related to misconduct that occurred prior to the date TRESA came into force, will continue to be addressed under REBBA as it read before that date.

Under TRESA, all unclaimed trust funds, including trust funds held on behalf of a person who cannot be located, are to be submitted to RECO after two years. The change aligns the timing of submission of any unclaimed trust funds to RECO.

Related information:

• TRESA subsection 27(5) regarding unclaimed trust money

Under TRESA, brokerages are required to promptly notify RECO, in writing, if any of the following circumstances occur:

• The brokerage’s liabilities exceed the realizable value of its assets, or the brokerage is unable to pay its liabilities as they become due.
• An insolvency proceeding is commenced by or against the brokerage or the brokerage is in receipt of knowledge that such an insolvency proceeding is imminent.
• A court order or judgment is made against the brokerage in relation to:
  • • trading in real estate, or
    • misappropriation, fraud or breach of trust.

Related information:

• General regulation section 31.2 (Notification of financial circumstances)

Under TRESA, brokerages are required to notify RECO of any instances of shortfalls in the trust account and any missing property held in trust.

Related information:

• Educational Requirements, Insurance, Records and Other Matters regulation section 14 (Shortfall)

Under TRESA, a brokerage must make such records as are reasonably required for the conduct of the brokerage’s business of trading in real estate, in addition to records required to be made under the legislation.

Related information:

• Educational Requirements, Insurance, Records and Other Matters regulation section 18 (Additional records)

Under TRESA, RECO has the authority to request information from registrants or a group of registrants for purposes related to the legislation. This may, subject to the regulations, include a request for information about a trade in real estate, if the purpose of the collection about a trade is to:

• • exercise a power or duty related to the administration of the Act or the regulations
  • further regulatory oversight, including assessing trends in the information that may impact compliance and enforcement activities
  • further consumer education and awareness regarding the advancement of consumer protection and a fair, safe, and informed real estate market, or
  • further registrant education and awareness regarding roles and responsibilities under the Act and the regulations.

For example, RECO may begin collecting information related to the number and type of transactions, details of money held in trust, and other information, to support a risk-based approach to regulation and to fulfill its regulatory oversight obligations.

RECO will provide registrants with advance notice of the information it intends to collect, and the form in which it must be provided.