TRUSTED ADVISOR AND ADVOCATE
TRUSTED ADVISOR AND ADVOCATE
The Real Estate Council of Ontario (“RECO”) regulates real estate agents, brokers, and brokerages in Ontario by administering the Trust in Real Estate Services Act, 2002 ("TRESA"). This act requires registration of such individuals/businesses, which involves meeting and maintaining certain levels of honesty, integrity, and financial responsibility. RECO has broad registration, discipline, and prosecution powers to uphold these standards and revoke the registrations of individuals and business who don’t up hold them themselves.
Burokas Law acts as a real estate agent Lawyer by representing real estate agents, brokers, and brokerages in all their dealings with RECO. Services include:
RECO’s powers are generally divided into- Registration, Discipline, and Prosecution.
Real estate agents, brokers, and brokerages must be registered to trade in real estate. RECO employs a “Registrar” who, with the advice of management and legal staff, makes administrative decision regarding registration. These actions include:
The Registrar’s authority, while broad, is not absolute. Applicants and registrants (registered individuals or business) can appeal the Registrar’s decision to the License Appeal Tribunal (“LAT”), and independent tribunal that decides whether the Registrar’s administrative action should be accepted or not.
Registration with RECO involves meeting both prescribed requirements and general tests for registration. Prescribed requirements can be found in the “General” Regulation of TRESA- Ontario Reg 577/05 and differ somewhat between agents, brokers and brokerages. RECO will not process your application if you have not met them and you will not be entitled to a hearing regarding that decision.
General Test for Registration
Once an individual or business has met all the prescribed requirements for the class of registration they seek, they are entitled to registration. If a regulator seeks to refuse their application, they must establish at least one of the following:
At least one of these criteria must be shown by the Registrar to refuse, refuse to renew, revoke, suspend, or impose conditions on a registered individual or business. If a Regulator wants to take one of these actions, they must issue a “notice of proposal” to refuse, revoke, suspend, refuse to renew, or impose conditions whereby they are required to explain what criteria above they are relying on and why.
The REBBA employs a concept called an “interested person” to the registration criteria above. An interested person is someone who is either: 1) in at least one of many types of legal relationships with the applicant or officer/directors (ex. partners in the same partnership) or, 2) in the opinion of the registrar:
RECO uses the interested persons concept to look beyond the face of a business to determine who is really in control. They are wary of people who appear good on paper being used as fronts for other individuals who would otherwise not be eligible for registration under the forgoing criteria.
Once an applicant or registrant receives service (usually through a courier) of a notice of proposal, they have 15 days to file a Notice of Appeal with the Licence Appeal Tribunal (“LAT”). LAT will schedule a “case conference” to:
Hearings at LAT
Hearings at LAT are heard by an impartial member, vice-chair, or chair of the Licence Appeal Tribunal. They are structured similar to a trial in court, although slightly less formal. In most cases the member will make determinations on contentious factual issues and then determine whether or not the Registrar’s Notice of Proposal should be carried out, not carried out, or not carried out subject to certain conditions on a registration. LAT’s rules and procedures for case conferences and hearings are outlined in their own Rules of Practice and the Statutory Powers and Procedure Act, 1990.
Conditions of Registration
An individual or business may have conditions on their class of registration that creates additional obligations or limits their ability to practice. Conditions arise either when the applicant or registrant (as the case may be) consents to conditions (often as an alternative to a proposal to refuse or revoke) or, the Registrar issues a Notice of Proposal to impose conditions on a registration. The latter can be appealed to LAT in the same manner as a refusal, suspension, refuse to renew, or a revocation.
If a Registrar believes on reasonable grounds a registrant is making false, misleading, or deceptive statements in their advertising, they may:
Like other proposals, the Registrar must issue an order setting out his/her reasons for the conditions and a registered individual or business has the same right of appeal to LAT with necessary modifications.
RECO is empowered to pursue discipline proceedings. These proceedings deal with the question of whether an individual or corporate registrant violated TRESA or their Code of Ethics, which include specific prohibitions for registered individuals and businesses. If the Registrar alleges that they have breached the Code of Ethics, they can issue a “Notice of Complaint” similar to a Notice of Proposal that will outline which part of the code of ethics is alleged to have been breached and why.
Registered individuals can appeal a Notice of Complaint to a “Discipline Committee” overseen by the RECO but with independent adjudicators. The RECO Discipline Committee has its own procedural Rules of Practice similar to LAT and also holds pre-hearing conference for the same purposes. Matters that go to a hearing are heard by adjudicators who may make findings of fact and will determine whether the relevant registered individual or business violated the Code of Ethics.
The consequences for an individual or business being found in violation of the Code of Ethics include:
RECO also has an Appeals Committee that hears appeals from decisions of the Discipline Committee.
Discipline is often used for conduct that is concerning to the Registrar but falls below the registration criteria to impose conditions/suspend/revoke.
RECO is also empowered by their legislation to receive complaints from the public and compel a registered individual or business to provide information regarding the complaints as “soon as practicable”. RECO has compliant handlers empowered to mediate complaints, but they can also refer the matter to the Registrar who may then issue a Notice of Proposal to revoke, suspend, impose conditions, or refuse to renew a registration, or may issue a Notice of Discipline.
Hearing complaints is a common way RECO receives information that initiates one or multiple of their powers- proposals, discipline, prosecution. It’s important for registrants to work with complaint handlers and adhere to their requests for information to avoid administrative action.
Inspections is another primary way RECO obtains information that may lead to administrative action. Unlike individuals being investigated for an offence by investigators (see below) or the Police, registered individuals and business in the Real Estate industry can be subject to inspections without warning for the purpose of ensuring compliance with their rules and regulations, dealing with a complaint, or ensuring that the individual or corporation remains entitled to registration.
These inspectors are entitled to search and seize access to all money, valuables, documents, data storage devices, and records relevant to the inspection, and may temporarily seize such items. During the course of an inspection, a Regulator’s inspector may require a person to produce documents, records, data storage devices. All registrants are prohibited from obstructing the inspector.
RECO also employs “Investigators”, to investigate offences under the TRESA. They have Police like powers in executing search warrants and gathering evidence. Such investigations can lead to a prosecution, discipline, proposals, or any combination thereof.
A person (not just a registrant) is guilty of an offence if they fail to comply with any section of the TRESA (including regulations) except their Code of Ethics. Individuals convicted under these Acts are liable to a fines up to $50,000 ($250,000 for corporations) and two years less a day in prison. The most common offences laid are acting as an unregistered agent, falsifying documents, and furnishing false documents. Individuals or corporations may also be charged by their Regulator under the Consumer Protection Act, 2002, often for unfair business practices related to unconscionable, false, misleading, or deceptive representations.
The charges laid by RECO are considered “quasi-criminal” offences under the Provincial Offences Act, 1990. Individuals charged will be provided by the RECO investigator with an Summons to Appear that will legally require an individual (or their agent) to appear at Provincial Offences Court in the Ontario Court of Justice closest to where the offence is alleged to have occurred. RECO has prosecutors that will act like a Crown Attorney in a criminal matter in prosecuting the matter in court.
Once before the courts, the matter will progress similar to criminal charges where they will be a series of court appearances, disclosure of evidence to the accused, possible conferences with a Justice of the Peace, and possibly a trial before a Justice of the Peace.
Being found guilty of an offences under TRESA or the Consumer Protection Act will not create a criminal record but will severely prejudice an individual's or business's ability to practice in the Real Estate industry.
If you are a real estate agent, broker, brokerage, or subject to an administrative action from RECO, please free feel to contact Burokas Law all of your questions and concerns