Ontario’s Trust in Real Estate Services Act (TRESA) marks a significant departure from the Real Estate and Business Brokers Act (REBBA), which previously governed the industry. This change is a positive shift in the regulatory framework that governs the conduct of real estate agents and brokerages; it enhances transparency, accountability, and consumer protection in the real estate market.
We spoke with Angie White, Broker Manager at Paul Rushforth Real Estate, to better understand the most recent changes. She’s spent the last several months studying TRESA and providing extensive training to the real estate team.
What is TRESA?
The act is designed to safeguard consumers in Ontario’s real estate market by regulating the actions of agents and brokerages. TRESA is being rolled out in three phases, and the most recent, Phase 2, focuses primarily on consumer protection.
TRESA Phase 1
In October 2020, Phase 1 created Personal Real Estate Corporations (PRECs), offering realtors significant tax benefits and other advantages. Now, with over 10,000 realtors taking advantage of a PREC, it’s clear that TRESA’s initial phase made a substantial impact.
TRESA Phase 2
Phase 2 of TRESA came into effect on December 1, 2023, bringing with it a series of important updates for real estate agents, buyers, and sellers. These changes include new definitions of key terms, updated representation rules, additional disclosures, paperwork, and more. The new requirements aim to address common issues that led to confusion and dissatisfaction in the past.
Angie explained the importance of these changes for real estate brokerages, stating, “Everything is designed to make it more transparent for consumers and to ensure that they understand what they’re getting into, what they’re signing, and what the process is.”
TRESA Phase 3
Looking ahead, Phase 3 of TRESA promises to focus more on the regulatory side, including regulations to support specialty certifications for real estate agents, improved continuing education, and updates to the Real Estate Council of Ontario (RECO) registration process. (We are still awaiting the rollout date for Phase 3.)
TRESA’s Phase 2 Changes
Phase 2 of TRESA is reshaping Ontario’s real estate landscape. Angie broke down six of the most noteworthy changes for us:
- Redefining Relationships: Clients & Self-Represented Parties
- Multiple Representation & Designated Representation
- RECO Consumer Information Guide
- Sharing Contents of Offers
- Updates to the Code of Ethics
- Stronger Powers for RECO
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1. Redefining Relationships: Clients & Self-Represented Parties
“One of the biggest shifts under Phase 2 of TRESA is eliminating the term ‘Customer.’ You’re either a client—with whom we, as real estate agents, hold a fiduciary duty—or a self-represented party,” Angie explains.
In the past, the Ontario real estate industry distinguished between ‘clients’ and ‘customers,’ which often led to confusion. This change simplifies understanding of the relationship between real estate professionals and the individuals they serve.
Angie further clarifies that these rules stipulate that self-represented parties are on their own. “We aren’t allowed to use our skills or expertise to assist them.”
2. Multiple Representation & Designated Representation
Multiple representation (which occurs when a brokerage represents both the buyer and the seller) has changed under Phase 2 of TRESA to better protect the interests of all parties involved. Angie explains that “multiple representation still exists, but with TRESA, there’s now a requirement for more transparent disclosures. Before any transaction occurs, separate forms for multiple representation must be explained and signed by everyone involved.”
Moreover, TRESA has introduced the concept of designated representation to minimize conflicts of interest and improve transaction integrity. “Designated representation means that an agent or a team directly represents a client and ensures that when two agents from the same brokerage represent the buyer and the seller, a clear separation of information and duties exists.”
Paul Rushforth Real Estate has adopted new protocols to navigate these changes. We’ve changed database permissions, restricted access to notes and listing paperwork and updated forms. “If we list a property under designated representation and another agent submits an offer, that agent cannot access any details, including information like the seller’s preferences or circumstances, such as a divorce.”
Angie emphasizes the benefit of this shift, “It’s a win-win for buyers and sellers.” Though multiple representation can occur, anything you disclose to your real estate agent must be kept completely confidential.
3. RECO Consumer Information Guide
One of the biggest changes in Phase 2 is the introduction of the RECO Consumer Information Guide. This guide, developed to help buyers and sellers make informed decisions, is now a mandatory part of the process.
“Before meeting with any individual or showing Ottawa area properties, we must share and fully explain the document,” says Angie.
It’s written in plain, easy-to-follow language and covers many subjects, including the differences between a self-represented party and a client, contract intricacies, complaints and more. “It’s a tool for transparency that makes the real estate process more accessible and understandable for consumers.”
4. Sharing Contents of Offers
Another key change in TRESA Phase 2 involves how offer contents are shared. “Previously, the details of offers were kept under wraps. Now, sellers can choose to disclose certain details of the offers they receive, such as price and closing dates, to all prospective buyers,” Angie says.
Again, this change is aimed at fostering transparency, for example, in bidding wars. “If a seller receives multiple offers, they can opt to share the offer prices, enabling all buyers to have a fair shot at adjusting their bids,” Angie elaborates.
However, Angie also notes the potential drawbacks, “While this opens up the possibility for more transparency, it’s ultimately up to the seller. They decide what information, if any, is shared. It places a lot of power in sellers’ hands, which has pros and cons. Buyers need to be prepared for this new dynamic.”
That’s why having knowledgeable agents like the Paul Rushforth Real Estate team by your side is so crucial; we can help you understand these nuances and guide you through the process.
5. Updates to the Code of Ethics
Previously, the Code of Ethics was long and complicated. Now, it’s condensed to two pages (from 11) and focuses solely on what realtors need to adhere to for realtors. All technical and procedural details have been relocated and added as regulations within the TRESA Act itself.
6. Stronger Powers for RECO
Under TRESA, the Real Estate Council of Ontario (RECO), which regulates real estate professionals in the province, has earned some new powers.
Previously, RECO’s disciplinary committee was limited to addressing allegations of non-compliance with the Code of Ethics but will now be authorized to handle any failure to comply with TRESA. Additionally, the committee will have the ability to suspend, revoke, or impose conditions on a realtor’s registration.
Paul Rushforth’s TRESA Expertise
Paul Rushforth Real Estate has proactively approached the new TRESA rules.
“There’s a lot of confusion in the industry, with many agents feeling completely lost and confused by all the changes, but our team thoroughly understands TRESA,” explains Angie. “For months, my job was to dive deep into the legislation, collaborate with brokers city-wide, develop comprehensive resources and educate our agents.”
She created flow charts and new forms and conducted in-depth training. “I can personally ensure that every agent on our team has the information and tools they need to navigate these changes effectively.”
“We understood the significance of these changes early on. By the time December 1, we weren’t just ready; we were already in full compliance,” she reflects.
Working With Paul Rushforth Real Estate
In this ever-evolving real estate market, Paul Rushforth Real Estate offers a clear advantage. We have a deep understanding of TRESA and know Ottawa’s market conditions, timing, and pricing better than anyone.
If you are looking to buy, sell, or invest, we‘re ready to help you reach your real estate goals and deliver exceptional results.
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Paul Rushforth Real Estate is a member of the Ottawa Real Estate Board, the Ontario Real Estate Association, and the Canadian Real Estate Association.
