The Trust in Real Estate Services Act (TRESA) took effect on December 1, 2023, replacing the 20-year-old Real Estate and Business Brokers Act (REBBA). The new Act brings better consumer education and transparency to the buying and selling experience and is designed to protect the best interests of the client (buyer or seller).
Whether you’re buying or selling now or in the future, we break down the main concepts of TRESA to help you navigate the new rules.
Clients, not customers
In the previous REBBA, an agent could work with a buyer or seller as either a “client” or a “customer.” In the new TRESA, any buyer or seller working with an agent is now called a “client.” This shift was to remove the confusion around who is a client and who is a customer, with any party represented by an agent now referred to as a client. A seller choosing not to have an agent represent them is now called a self-represented party (SRP). In this case, the seller is responsible for the listing price, staging, marketing, organizing showings, and negotiating offers. While this may save the seller real estate fees, it comes with inherent risks, specifically the absence of professional advice from a licensed broker with the experience to price a home correctly and negotiate the deal on their behalf.
Changes around representation
Until now, real estate agents could act as multiple representatives, meaning they could represent both the buyer and seller in a sales transaction. Those situations sometimes resulted in limited disclosure and a buyer whose best interests were poorly represented. With the recent changes, the buyer and seller can be assured they will have their own designated representation. This means that if one brokerage represents both the seller and buyer, they will each have their own agent who will act in their best interest. This allows agents from the same brokerage to disclose more information and represent the best interests of their clients.
New code of ethics
The new code of ethics was designed to protect the client (buyer or seller) and ensure their best interests are the agent’s top priority. Now, agents and sellers are required to disclose all known information about a property that may impact the buyer’s decision to make an offer and for how much. Personal information about the buyer or seller must remain strictly confidential and cannot be shared with anyone outside the brokerage without the expressed written consent of the client, even years after a sale. Agents must also avoid any situation that can be considered a conflict of interest and affect their ability to act in their client’s best interest. If a conflict arises, the client must be informed, and the agent may not continue their representation without the client’s written consent.
Transparent offer process
The new additional transparency clause means that sellers can now share the details of competing offers with buyers. Personal information remains private; however, the seller can decide whether to hold open or closed offers. If the seller chooses an open offer process, the buyer would be informed of competing offers, including prices, terms, conditions, deposits and closing dates. The seller can also change their mind at any time so long as the agent includes the clause in their agreement.
The RECO information guide
The Real Estate Council of Ontario (RECO) is the governing body of real estate professionals in Ontario. The new guide was designed to hold agents accountable for any non-compliance issues related to TRESA and may suspend or revoke an agent’s designation once a complaint is investigated. Under the new Act, each buyer and seller will receive the RECO Information Guide upon agreeing to representation with a broker. The guide provides all the need-to-know information to help buyers and sellers navigate the real estate transaction.
While the new Act contains a lot of changes, the main takeaway for buyers and sellers is greater transparency, better protection, and more choice in agent representation.
