Considering the holidays were in full swing, you may have missed the new legislative changes to the Trust in Real Estate Services Act (TRESA) that took effect on December 1, 2023. Amending the legislation is part of a push by the Ontario government to strengthen consumer protections during the real estate transaction process. Along with trade associations such as the Canadian Real Estate Association, TRESA governs how real estate brokerages, brokers, and agents can conduct business with buyers and sellers in the province. With the spring cottage real estate market upon us, a looming interest rate announcement from the Bank of Canada next week, and newly released consumer price index data from Statistics Canada revealing that Canada’s annual inflation rate rose to 3.4 per cent in December, a lot is happening on the cottage real estate front. Now is the time for buyers and sellers to familiarize themselves with the new rules and how it will affect them.
Ray Ferris, the broker of record for Erie’s Edge Real Estate in Long Point, Ont., and the former president of the Ontario Real Estate Association, says two important changes directly impact cottager buyers and sellers.
What is designated representation and how is it different from before?
While designated representation isn’t a new business practice in other provinces in Canada, it is a first for Ontario. Under the new TRESA rules, when a client signs a designated representation agreement it avoids a scenario where they might receive limited services if the same real estate brokerage is on both ends of the transaction. Now, the agent can exclusively represent the buyer without limiting the information that they can share if the listing agent is from the same brokerage. Ferris says this offers a few advantages to cottage buyers who are coming from outside of the area.
“If a buyer from Toronto didn’t want to work with me because they didn’t want to receive limited services, they may go back to Toronto and strike up a conversation with the realtor from the city to help them buy the property that they looked at in Long Point, three hours away,” explains Ferris.
Under the old rules, a buyer might choose to go with another real estate agent from outside of the area as a way to avoid a multiple representation situation. Ferris contends an agent who is unfamiliar with the cottage area may prove to be disadvantageous to the buyer.
“They won’t know if internet is available in Long Point, what day garbage pickups are, or what the zoning bylaws are,” says Ferris. “So, at the end of the day, designated representation ensures consumers can work with realtors who intimately know the community in which they’re working.”
Disclosing the terms and conditions of competing offers to buyers
Another big change is that sellers have the option of disclosing offer information and terms to buyers—it’s known as open bidding. Before the new rules came into effect, sellers had to conduct blind bidding, which meant they could not reveal to buyers what the terms of competing offers were. As Ferris points out, the new legislation doesn’t force sellers into picking either approach.
“The seller doesn’t have to tell buyers in advance of them putting forward an offer in writing whether or not they’re going to share the contents of competing offers,” he says.“The seller can do whatever the seller wants.”
Of course, the objective here is for the seller to get the best offer they can get. “There’s no right or wrong answer. It will depend upon the circ*mstances at the time because every transaction is unique,” says Ferris. “At the end of the day the seller is going to decide whether to share, based on what they think is the best thing for them to get the best terms—generally, that’s the most amount of money for their property.”
- Realtor.ca launches open offers in an effort to curb bidding wars and inflated property prices
- Critics of Ontario’s new open bidding policy say it will do little to curb prices
How are these new rules playing out in cottage country?
As the broker for Erie’s Edge, Ferris deals with a lot of cottage transactions along the north shore of Lake Erie, including in Long Point, Turkey Point, and Port Dover. He says that winter is typically a slower time for cottage real estate.
“We haven’t seen a lot of this [sharing of contents of competing offers] as of yet because, in cottage country, we’re not experiencing a lot of sales at this time of the year.”
Featured Video
