The Ontario Trust in Real Estate Services Act (TRESA) represents a significant overhaul of real estate practices in Ontario. This legislation came into effect on December 1, 2023 and amends the previous Real Estate and Business Brokers Act (REBBA) and has two substantial implications for home buyers and sellers.

#1 – Competing Offers

The first major change in TRESA will offer some potential relief to buyers and sellers engaged in bidding war. Prior to TRESA, real estate agents were completely prohibited from sharing the details of competing purchase offers with prospective buyers. However, under the new regulations, the agents representing the seller must disclose the number of competing offers received to anyone that has also made an offer. In addition, the seller’s agent may disclose the details of those offers if they have obtained the seller’s permission to do so.

What Gets Disclosed and When?

Under TRESA, there are specific guidelines regarding the disclosure of information about competing offers.

A. Selective Disclosure of Offer Details
Under TRESA, a seller can authorize the release of certain aspects of competing offers, such as the price, while keeping other details confidential. This decision is typically made in consultation with the seller’s real estate agent and is based on the seller’s strategy and comfort level with sharing such information. However, any disclosure must be done fairly and ethically, ensuring that no party is misled or disadvantaged.

B. Changing Disclosure Practice Mid-Transaction
A seller can change their mind about disclosing offer details. For instance, they might initially decide to disclose certain information about offers but then choose not to disclose similar information for new offers that come in. This flexibility allows sellers to adapt their strategy based on the evolving dynamics of the bidding process. However, it’s crucial to maintain transparency and fairness throughout the transaction.

C. General Statements About Competing Offers
Sellers can make general statements about competing offers, like indicating that there are offers higher than a particular bid, without providing specific details. This approach is often used to inform potential buyers about the competitive nature of the offers without breaching the confidentiality of the specific terms of each offer.

It’s important to note that while TRESA provides a framework for such disclosures, the specifics can also be influenced by the listing agreement between the seller and their agent, and by the ethical and professional standards set by the Real Estate Council of Ontario (RECO).

Fair, Transparent and Ethical Disclosure of Bid Information

If a seller decides to release information about bids or offers received on a property, the approach to disclosure should be fair and non-discriminatory. This means that any information provided about competing offers should be made available to all interested parties or bidders. The key principles here are fairness and transparency.

A. Equal Access to Information
If the seller chooses to disclose certain details about the offers (e.g., the number of offers or the price level of these offers), this information should be shared with all parties who have submitted bids or expressed serious interest. This is to ensure that all potential buyers are on a level playing field and have the same opportunity to make informed decisions.

B. Consistency in Disclosure
The seller, typically through their real estate agent, should be consistent in the information disclosed to all bidders. Selectively disclosing information to certain bidders but not others could be seen as unfair and could potentially lead to ethical concerns or complaints.

C. Material Facts
Realtors must now disclose Material Facts, which are different from latent defects. Material Facts are anything that affects a buyer’s decision to buy, and the price they are willing to pay. These disclosures must be in plain language and clearly delineated.

Sellers should work closely with their real estate agents to understand the best approach to disclosing offer information and to ensure compliance with all legal and ethical requirements.
In all cases, the goal is to balance the seller’s interest in getting the best possible offer with the need to treat all potential buyers fairly and transparently.

These change to the bidding process should improve the transparency of the process and will impact the strategy used by sellers and buyers during the bidding process.

#2 – Representation Options

TRESA introduces an option that will allow brokerages to offer buyers and sellers a specific individual from a brokerage as their designated representative, rather than being represented by the brokerage itself. In these instances, the other party in a transaction may be represented by another individual in the same brokerage. For these transactions, the brokerage remains neutral in the transaction.

This new option aims to reduce the potential for conflict of interest, keep information confidential and allow for dedicated attention and communication from one agent. However, on more complex sales, buyers and sellers using a designated representative instead of a broker could miss out on the collective expertise of the brokerage, continuity of service and access to wider network of potential buyers.

If a buyer or seller chooses to not be represented by a brokerage or designated representative through a signed written agreement they will be designated as a self-represented client (SRC). Buyers or sellers choosing to self-represent are entitled to access necessary and relevant information about the property and to expect fair and ethical treatment from any real estate professionals they are dealing with. SRCs must take responsibility for ensuring that the sale/purchase transactions comply with all legal and regulatory requirements and manage the paperwork involved.

Professionals should be cautious when navigating these relationships and ensure they comply with the requisite rules and regulations. For example, a SRC can be provided with general market information, but a SRC should not be provided with advice on offers, nor should SRC’s be assisted with completing an APS. A SRC can decide to engage a real estate professional for representation at any stage of the transaction.