Real estate transactions are quite complicated. Without a lawyer’s help, unless you happen to be a real estate professional, any mistake may expose you to avoidable risk. However, if you retain the services of a Toronto real estate lawyer from the beginning of the real estate transaction process, you can avoid or reduce most of that risk.
Ontario’s current real estate market is growing like never before, and the provincial government has responded to this unprecedented growth with new laws that require more transparency and boost consumer protection – as well as consumer confidence – in the real estate industry.
What should you know about the many recent changes to Ontario’s real estate laws? When should you get in touch with an Ontario real estate lawyer? If you keep reading this brief discussion of the new real estate laws in Ontario, you will find the answers that you may need.
What is TRESA 2020?
In 2020, the Trust In Real Estate Services Act (TRESA 2020) became the law in Ontario. It is designed to help establish a more ethical, fairer business environment for consumers who buy real estate. TRESA 2020 amends the Real Estate and Business Brokers Act (REBBA 2002).
The Real Estate and Business Brokers Act governs Ontario’s real estate salespersons, brokers, and brokerages. RECO, the Real Estate Council of Ontario, is a not-for-profit corporation that is delegated by the Ontario government to enforce REBBA 2002 and related regulations.
TRESA 2020 is being implemented one phase at a time. In Phase One, brokers and salespersons were permitted to incorporate. They’re also allowed to use familiar terms like “REALTOR®” or “real estate agent” to describe themselves in advertising. Phase One concluded in October 2020.
What Will TRESA Phase Two Entail?
The predominant focus of Phase Two will be the development of a more comprehensive Code of Ethics. In 2021, the Ministry of Public and Business Service Delivery published for comments a draft of the regulations that are needed before other provisions of TRESA 2020 can take effect.
The draft of a revised Code of Ethics was written with input from real estate industry leaders and stakeholders, and it now clearly distinguishes ethical standards from procedural and technical standards and requirements. The new Code of Ethics is scheduled to take effect in 2023.
The new Code of Ethics spells out precise requirements for real estate professionals who are registered with RECO. When it takes effect, the Code of Ethics will require compliance about matters like the quality of customer service, professional integrity, and conflicts of interest.
What Other Changes Have Been Proposed?
A real estate brokerage that represents a seller is required by REBBA 2002 to disclose, to anyone making a written offer, how many other competing offers have been made. Brokerages, however, cannot discuss with potential buyers the specifics of those competing offers.
This leaves prospective buyers without useful information that they may need and adds even more uncertainty to a tough decision. The Ministry of Public and Business Service Delivery proposes to expand the information that real estate professionals may offer to buyers.
Real estate salespersons in Ontario, who have previously been completely prohibited from sharing the details of competing purchase offers with prospective buyers, would still need the consent of their seller clients in order to share any specifics.
The Ministry also proposes to boost the tools and powers that are delegated to RECO. Its proposals include allowing RECO to make more information publicly available and giving RECO more authority over notice requirement regulations, advertising, and record-keeping.
What About the Future?
In TRESA Phase Three, the Ministry of Public and Business Service Delivery will consider several additional regulatory reforms that are related to the certification of real estate professionals, including updates and changes to the certification and registration process.
All three phases of TRESA are intended to make it easier for the individual consumer to purchase real estate in Ontario, to provide more information and legal protection to those consumers, and to reduce their risks and the chances that a legal dispute will emerge.
When Should You Contact a Real Estate Lawyer?
Real estate is a smart investment, and when you buy real estate in Ontario, retaining the services of an astute and experienced Toronto real estate lawyer is also a smart investment. As mentioned previously, with a good lawyer’s advice from the start, you’ll reduce or avoid most of your risk.
When you buy real estate in Ontario, you cannot afford for anything to be wrong or to go wrong. Your real estate lawyer will scrutinize every document that is a part of your real estate purchase, ensure that the transaction is fully compliant with all applicable laws and regulations, and advise you against taking any steps that may run counter to your long-term best interests.
If a real estate seller misrepresents the legal status or condition of an Ontario property that you intend to purchase, or if a seller violates the terms or conditions of any written agreement, an Ontario real estate lawyer can probably take legal action against that seller on your behalf.
If a Real Estate Dispute Arises
An unanticipated disagreement may emerge whenever you purchase real estate or even after a closing, and the dispute may involve more than two parties. Insurance companies, tenants, real estate agents, owners, mortgage lenders, and buyers may all have a stake in a real estate dispute.
A real estate dispute may require considerable legal research and may take months – or longer, in some cases – to resolve. Financially, the stakes can be quite high, but going to trial in an Ontario courtroom may not necessarily be the best or most practical way to settle your real estate dispute.
Your lawyer may suggest seeking a resolution through the mediation process, the arbitration process, or through private negotiations before you take a real estate dispute to the courts. However, when a real estate dispute can’t be settled privately, it will be settled by a court.
In such cases, you will need a real estate lawyer who is both knowledgeable and experienced. If you purchase real estate in or near Toronto, ask a Toronto-area real estate lawyer to protect your legal rights and to watch out for your best long-term interests from the start of the process.