Last updated: May 8, 2024
Q: Can I switch between brokerage representation and designated representation?
A: While using both forms is not prohibited, it introduces risks, such as the potential for multiple representation if one client is represented under brokerage representation and another under designated representation. Brokerages benefit from clarity and simplicity by using a single type of representation model and agreement. Therefore, RECO advises against using more than one form of representation agreement.
It will be easier for brokerages to determine when multiple representation arises if all clients are under the same type of representation agreement. Additionally, brokerages will also need to ensure that all of their agents, and other brokerage employees, are using the right type of representation agreement, understand how confidential client information must be protected, and are aware of any other brokerage requirements related to the two forms of representation.
Q: What assistance can be provided to self-represented parties (SRP) and when can it be provided?
A: Under TRESA, individuals in a real estate transaction are either clients of a brokerage or self-represented. First, it’s most important to consider whether assistance can be provided to a self-represented buyer or seller. Here is what the law permits:
- You can provide assistance to a self-represented party if you are representing a client involved in the transaction.
- The assistance must be a service to an existing client in the transaction.
- Before assisting, verify that the person is self-represented.
- Provide and explain the RECO Information Guide, and the RECO’s Information and Disclosure to Self-represented Party form, and make best efforts to obtain an acknowledgment of having done so.
- You can encourage SRPs to seek representation, provide general real estate information, and assist in a manner consistent with your client’s best interests.
- You cannot provide services, opinions, or advice; encourage them to be self-represented; or discourage them from working with another agent.
Refer to Bulletin No. 2.4: Dealing with a self-represented party for more information.
Q: How can a buyer agent arrange for a self-represented or a mere posting seller to pay the buyer’s brokerage fees?
A: Representation agreements must clearly identify the method that will be used to determine the remuneration the buyer will pay the brokerage.
Under TRESA, brokerages are prohibited from entering into agreements with a buyer or a seller for the purpose of trading real estate, unless the agreement includes the provision of representation.
Therefore, brokerages must not engage in agreements with self-represented sellers to provide assistance or charge for it.
The remuneration terms should be clearly established in the representation agreement with the client. If your client cannot afford to pay their brokerage fees, the buyer’s agent could negotiate with the seller on behalf of the buyer, for the seller to provide cash back to cover the buyer’s real estate fees, using a remuneration clause in the agreement of purchase and sale. The agreement would be between the buyer and seller, not the seller and the buyer’s brokerage.
Q: What should I be aware of in multiple representation?
A: First and foremost, a brokerage or designated representative is prohibited from representing more than one client in a trade unless the brokerage makes a mandatory written disclosure, makes best efforts to obtain an acknowledgement that the disclosure was received, and after receiving the disclosure, each of the existing or prospective clients must decide whether they agree and consent to continued representation in the trade.
In brokerage representation, multiple representation occurs when the brokerage represents the seller client and one or more buyer clients in the same trade, or when they represent two or more buyers in the same trade.
In designated representation, multiple representation occurs when the same agent represents the seller and one or more buyers in the same trade, or when they represent multiple competing buyers in the same trade, or when they represent two or more buyers in the same trade.
It’s important to note that in multiple representation, none of the clients are fully represented. Clients lose the full benefit of the client relationship due to restrictions on services, information sharing, and advice.
Refer to Bulletin 3.2: Multiple representation for more information.
Q: Am I supposed to collect the acknowledgement of receipt of the guide?
A: Registrants are required to use best efforts to obtain an acknowledgement that the RECO Information Guide was provided to each person, prior to providing any services to a client or assistance to a self-represented party. This can be done in several easy ways:
- Retain a signed copy of the acknowledgement form, indicating the RECO Information Guide was provided and explained.
- Use RECO’s sharing tool to send filled acknowledgement forms via email.
- The Guide is available on several of the leading forms providers for a convenient electronic signature solution.
If an acknowledgement is signed, the brokerage would retain a copy in the corresponding trade file, for future reference should proof of the acknowledgment be necessary when responding to a complaint or other matter that might arise.
Refer to Bulletin 2.1: RECO Information Guide for more information.
Q: Are commercial registrants exempt from the obligation of providing and explaining the RECO Information Guide?
A: No, the obligations under TRESA are the same for registrants trading in residential and commercial property. To assist commercial agents in this obligation, RECO has created a commercial version of the Guide.
Q: Do we still have to provide the RECO Information Guide to prospective residential or commercial lease clients?
A: Yes, for both prospective residential and commercial lease clients you are required to provide and explain the RECO Information Guide before providing any services or assistance for all types of trades. To assist commercial agents in meeting this obligation, RECO has created a commercial version of the Guide.
Q: What are the new rules about sharing the contents of offers?
A: New under TRESA, if the seller directs in writing, the content of offers or select parts of the contents must be shared with everyone making an offer. The seller, with their agent's guidance and advice as to why doing so would be in the client’s best interests, decides whether to share offer content and can update their instructions at any time.
Buyers might not know beforehand if their offer contents will be shared. Buyer agents must communicate to their buyer clients that the seller can choose to share offer contents at any point. As a buyer’s agent, you would provide your buyer client with information about what options are available to address any concerns they have. If a buyer client does not want to participate in a process that shares offer contents, they could consider the possibility of submitting a confidential offer. The buyer’s agent would explain the available options and benefits and risks of each to allow the buyer to make an informed decision.
When sharing the contents of offers, here are some key points:
- Written direction: The seller's written direction is required before sharing offer content. Text messages or emails are sufficient, but clear, formal written direction is required.
- Disclosure timing: There are no specific rules for when the seller’s decision to share offer content must be communicated and it can happen at any time in an offer process. However, the agent must share the directed content to any buyer making an offer.
- Content sharing rules: Sellers ultimately decide what parts of offers to share. There is no minimum information requirement; buyers should not assume shared information includes purchase price or other specific details. However, no information can be shared that identifies any of the parties submitting one of the offers.
Refer to Bulletin No. 4.1: Number and content of competing offers for more information.
Q: What about clauses for buyers that attempt to prevent the sharing of offer content? Are these legitimate or enforceable?
A: As a regulator, RECO’s mandate is to regulate the conduct of agents and brokerages to make sure they comply with the law. Buyers might submit offers that contain confidentiality clauses.
It is advisable for buyers and agents to seek legal counsel to assess the possible benefits and risks of such an approach and whether those types of clauses are enforceable. Similarly, sellers and their agents should carefully review such offers and seek legal advice regarding what actions can and cannot be taken based on the terms of the offer.
Q: Is RECO giving registrants a break on enforcing the new laws while we adjust?
A: RECO is accountable for enforcing both REBBA, for conduct that occurred up to November 30, 2023, and TRESA, for conduct that occurred on December 1, 2023, onwards.
While our initial focus has been to provide registrants with the information to comply with TRESA, it is important to underline that it is each registrant’s responsibility to understand and trade in real estate in compliance with the law. We have begun to address complaints involving conduct that has taken place under TRESA, and we will be addressing them as required under our mandate as regulator.
We encourage all agents to complete the CE Course: Introduction to TRESA and review all RECO Bulletins to ensure compliance during all real estate trading activities.
