Ontario is introducing regulatory changes to address "conflict of interest scenarios" involving real estate agents who represent both sides of a sale, but has stopped short of a ban on the controversial practice of "double-ending."
The proposed changes, announced by the Minister of Government and Consumer Affairs Tracy MacCharles at Queen's Park on Thursday, would mean tighter rules for salespersons, brokers and brokerages representing more than one party in a real estate deal.
The legislation would also raise fines for people who violate the industry's code of ethics, from $25,000 up to $50,000 for individual salespersons and brokers, and up to $100,000 for brokerages.
Response to concern raised by media
"What we're doing is responding to what's been in the press a lot about multiple representation where you have one agent on the same transaction," MacCharles told reporters Thursday. The changes would not ban double-ending, but would narrow the circumstances in which it would take place.
"Specific situations such as in rural Ontario where there might not be more than one agent, perhaps in a family situation … or perhaps in commercial or industrial situations where external real estate representation and expertise is essential," MacCharles said.
However, the preference would still be that real estate deals follow what's known in the industry as the designated representation model, where buyer and seller each have their own agent.
It would be largely up to the Real Estate Council of Ontario to take disciplinary action in cases where a real estate professional doesn't comply with the new rules, she said.
Last year, an undercover investigation by CBC's Marketplace revealed that several top agents in the Toronto area were breaking the rules by offering unfair advantages to potential clients in an effort to secure both ends of a deal.
'A big step forward'
The rule changes could include more up-front disclosures to consumers when double-ending occurs. But exactly what teeth the regulator would have in terms of enforcement is yet to be worked out through consultation.
Tim Hudak, CEO of the Ontario Real Estate Association, applauded the proposed legislation, calling it "a big step forward" and saying it's the strictest set of industry regulations anywhere in North America.
Asked if he felt double-ending should be made illegal, he responded: "It still allows consumers to say, 'I know you, you've helped me before, you're a good Realtor, I trust you.'
"This is the biggest expenditure that the vast majority of us make in our lifetime. So you want somebody that you know is going to give you the best advice, give you the best deal.… So you should always preserve choice."
Toronto broker John Pasalis said he is largely in favour of the proposed changes, but that banning double-ending simply isn't practical within a real estate brokerage business.
But Pasalis, CEO of Realosophy, points out that changing the maximum penalty does little to dissuade unethical Realtors, since he's not sure fines are taken seriously.
"I think that's one of the tensions when you have an industry that sort of self-regulates," he said. The board of directors at the Real Estate Council of Ontario consists almost entirely of brokers and agents.
"The default should be agents should be losing a good portion of the commissions that they've earned on those transactions if they've been found to have done something that's unethical. The fines should be over and above that," he said.
Otherwise, he said, the fine is just "the cost of doing business."
For its part, the real estate council said it is pleased with the announcement and wants to see the province press for further restrictions on double-ending.
"The introduction of the bill is one step toward changes taking effect," the council said.
A spokesperson for the council told CBC News the organization doesn't currently have the data or resources to enforce the changes if they become law.
MacCharles has said she wants to give the regulator the ability to acquire that data.