Earlier this fall, the Ontario government announced the coming into force of new regulations intended to modernize the province’s real estate market.
What is TRESA?
The Trust in Real Estate Services Act, 2020 (“TRESA”), formerly known as the Real Estate and Business Brokers Act (2002), was passed by the Ontario legislature on February 28, 2020 and received Royal Assent on March 4, 2020. TRESA is intended to modernize the rules for registered real estate brokerages, brokers and salespersons.
The changes to the Act are meant to:
- Enable regulatory changes to improve the information consumers receive about what a real estate professional and brokerage must do for them, which would give consumers more choice in the real estate purchase and sale process.
- Improve professionalism among real estate professionals and brokerages by allowing for regulatory changes to enhance ethical requirements.
- Update the Real Estate Council of Ontario’s (RECO) regulatory powers, including allowing it to levy financial penalties (also known as administrative penalties) to promote compliance with the Act — and allowing RECO’s registrar to take into account a broader range of factors when considering eligibility for registration.
- Create a stronger business environment by laying the foundation to allow real estate professionals to incorporate and be paid through the corporation while maintaining measures that protect consumers, as well as by enabling the creation of a specialist certification program that may be developed by government or by RECO.
- Bring the legislation up to date and reduce the regulatory burden.
First Phase
In a press release on October 1, 2020, the Ontario government announced the first phase of regulatory changes related to TRESA, which included regulations to align real estate brokerages and professionals with modern business practices. The new measures will:
- Allow real estate professionals to incorporate and be paid through Personal Real Estate Corporations (PRECs).
- Let salespersons and brokers use additional advertising terms such as “real estate agent” and REALTOR® in their advertisements, better reflecting the services they provide to consumers across the province.
A PREC is a form of business incorporation that allows real estate professionals to obtain the same tax and income benefits that other businesses benefit from.
Second Phase
The expected second phase of regulatory development will include public consultations with consumers and real estate professionals that focus on further measures to support trustworthiness and the highest ethical standards in the real estate sector, including:
- Updating and modernizing the Code of Ethics for real estate professionals;
- Implementing disclosure requirements to better protect consumers; and
- Improving regulatory efficiency and enhancing professionalism in the industry by updating the authority and powers of the Real Estate Council of Ontario.
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