Ontario Real Estate LawJune 1, 2013
[Updated Jun27 2013]
I. Introduction to the Real Estate and Business Brokers Act
The Real Estate and Business Brokers Act (the “Real Estate Act”) was enacted in Ontario on March 31, 2006. The Real Estate Act replaced the prior Real Estate and Business Brokers Act of 1990. The Real Estate Act contains eight parts, which deal with topics such as registration, regulations, conduct and offences, prohibitions and complaints. It generally regulates the conduct of real estate brokers and the real estate industry in Ontario.
The origins of the Real Estate Act go back to Chapter 247 of the Real Estate Brokers Act which was initially enacted in 1930. The initial rules set forth in that act were minimal. Those regulations underwent revision over the years, until around 1975, when requirements for education were put into place. Continuing educations requirements were put into place in 2000.
The Real Estate Act contains eight parts. The substantive portions of the statute are as follows: Part III of the Real Estate Act prohibits anyone from acting as a real estate broker without properly registering as a brokerage; Part IV sets out with specificity the requirements for registration; Part V deals with complaints and discipline against brokers; and Part VI deals with conduct and offences.
II. Administration of the Real Estate Act.
The Real Estate Act is administered by the Real Estate Council of Ontario (“RECO”). RECO was established in 1997 as an administrative authority under the Safety and Consumer Statutes Administration Act, in order to ensure professionalism, consumer protection and an effective regulatory framework for the real estate industry. RECO administers the Act in accordance with the terms of an agreement with the Ministry of Consumer Services.
III. Complaints and Discipline under the Real Estate Act.
As noted previously, Part V deals with complaints, inspection and discipline. Under the provisions of Part V, a complaint against a registrant may be made to the registrar. The registrar may then request information from the registrant, and further may use its inspection powers to enter the office of the registrant. The registrar has the following specifically enumerated powers:
(a) is entitled to free access to all money, valuables, documents and records of the person being inspected that are relevant to the inspection;
(b) may use any data storage, processing or retrieval device or system used in carrying on business in order to produce information that is relevant to the inspection and that is in any form; and
(c) may, upon giving a receipt for them, remove for examination and may copy anything relevant to the inspection including any data storage disk or other retrieval device in order to produce information, but shall promptly return the thing to the person being inspected.
If there has been a violation of the code of ethics, a discipline committee is established to hear and determine if a registrant has failed to comply with the code of ethics. If there has been a violation of the code of ethics, then the discipline committee has a number of options . Those options include:
1. Requiring the broker or salesperson to take more educational courses.
2. Require the brokerage to fund additional educational courses for the brokerage.
3. Impose a fine up to $25,000.
4. Suspend or postpone any of the courses or fines previously described.
5. Fix and impose costs of the proceeding on the registrant.
A registrant may appeal the final order of the discipline committee.
IV. Conduct and Offences under the Real Estate Act.
Part VI of the Real Estate Act sets forth a number of requirements brokerages must comply with, as well as a number of prohibitions on the conduct of brokers. That section requires that every brokerage maintain a brokerage trust account in Ontario, and contains provisions regarding interest on a trust account and unclaimed trust money, among others. The prohibitions include provisions against breaking rental contracts, provisions against false advertising, and provisions regarding commissions on real estate transactions. There are also provisions which allow any fine levied under the Real Estate Act to become a lien against personal and real property.
V. The Mortgage Brokerages, Lenders and Administrators Act
In addition, Ontario has also enacted the Mortgage Brokerages, Lenders and Administrators Act of 2006, which was enacted on July 1, 2008 and administered by the Financial Services Commission of Ontario(the “Mortgage Act”). The Mortgage Act replaced the Mortgage Brokers Act of 1990. The Act requires all who conduct mortgage brokering to be licensed. Similar to the Real Estate Act, the Mortgage Act sets forth the types of licenses and licensing process for mortgage brokers.
The Mortgage Act also contains provisions regarding the registration of mortgage brokers’ licenses, as well as the licensing process. It places certain duties on a mortgage broker. Brokers must disclose to borrowers the true costs of borrowing money as a rate per annum. Brokers must also make a number of additional disclosures including whether a mortgage may be prepaid, if there are any prepayment penalties, if there are any late payment penalties, and particulars of any rights or obligations of the borrower.
The Mortgage Act sets forth a number of offences and prohibitions. There is a prohibition against providing false or deceptive information, a prohibition against obstruction in an investigation by the Superintendent, and a prohibition on reprisals against employees for “whistle-blowing” for the bad acts of an employer. The criminal penalties for violation of the Mortgage Act are also listed in this section. An individual convicted of an offence is liable to a fine of not more than $100,000 or imprisonment for a term of not more than one year or both a fine and imprisonment. A corporation convicted of an offence under the Mortgage Act may be liable for a fine of not more than $200,000.
VI. Protection of the Public Interest.
The Ontario Real Estate Association is the licensing and educational administration group which governs real estate brokers. It was founded in 1922 to promote higher industry standards, protect the general public from unscrupulous brokers and to preserve private property rights. Thus, despite the lengthy requirements of both acts, real estate buyers and sellers in Ontario are benefited. Further, those consumers who may have been harmed have an avenue for the filing of complaints against brokers through the Real Estate Act. Both acts ultimately serve to protect the interests of the public in Ontario.
Service Ontario, Real Estate and Business Brokers Act, http://www.elaws.gov.on.ca/html/statutes/english/elaws_statutes_02r30_e.htm , accessed June 1, 2013
RECO, Who We Are, http://www.reco.on.ca/professional/About-WhoWeAre.html? accessed June 1, 2013
Real Estate and Business Brokers Act, Part V, 20.2, http://www.elaws.gov.on.ca/html/statutes/english/elaws_statutes_02r30_e.htm, accessed June 1, 2013
Real Estate and Business Brokers Act, Part V, 21.4, http://www.elaws.gov.on.ca/html/statutes/english/elaws_statutes_02r30_e.htm, accessed June 1, 2013
Real Estate and Business Brokers Act, Part VI, 27.1, http://www.elaws.gov.on.ca/html/statutes/english/elaws_statutes_02r30_e.htm, accessed June 1, 2013
Service Ontario, Mortgage Brokerages, Lenders and Administrators Act, 2006, http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06m29_e.htm>, accessed June 1, 2013
Service Ontario, Mortgage Brokerages, Lenders and Administrators Act, 2006, Section 7 http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06m29_e.htm#BK48> accessed June 1, 2013
http://www.orea.com/About> accessed June 1, 2013