Proposed legislation covering real estate transactions in Ontario, Canada is aimed at strengthening consumer protection by increasing fines for agents and brokers convicted of wrong-doing under the new Real Estate and Business Brokers Act.

The proposed legislation would come down hard on real estate professionals who falsify or assist in falsifying information or documentation about real estate sales. It would also prohibit agents and brokers from promoting themselves as "specialists" in particular areas unless they are certified as such.

The proposal would increase fines for those convicted under the Act, to $50,000 for individuals from the current $25,000; and to $250,000 for corporations, from the current fine of $100,000. Jail sentences, currently limited to one year, would increase to two years less a day. (Under Canadian law, a jail sentence of two years or more requires incarceration in a federal penitentiary rather than a provincial facility.)

Dual agency, in which an agent or broker represents more than one party in a real estate transaction, is also addressed in the draft legislation. It would grant the province's Lieutenant Governor in Council (LGIC) the authority to determine what constitutes dual agency and what information must be disclosed to the parties to the trade. The LGIC would also have the authority to draft regulations in other areas, so the Act can keep pace with changes in the way real estate is sold. The regulations would deal with new types of business models, allowing for different classes of registered real estate agents and brokers.

There is also a section relating to false or misleading advertising, which under the current law is not prosecutable. That changes under the new legislation.

A real estate professional would not be allowed to advertise themselves as "specialists" in particular areas of real estate, such as commercial real estate, unless they were certified in that area. However, the proposals do not prohibit an agent or broker from trading in areas in which they are not certified -- they just can't say they are specialists.

While the issue of whether banks should be allowed to sell real estate is a hot topic in the United States, Ontario Realtors seem more concerned that lawyers might be looking at real estate sales as a way to increase income.

Under the current Ontario laws, lawyers don't have to register for a real estate license "where the trade is made in the course of and as part of the solicitor's practice". In the new regulations, a proposed clarification "would make it clear that a solicitor could not advertise that he or she could sell houses on behalf of clients without being registered under the Act, but could represent a client's legal interests in real estate transaction," says the draft legislation guide.

Ontario Real Estate Association (OREA) President Dianne Usher says: "No substantive changes have been made to this Act in over 50 years, while the real estate market has undergone radical change. Today's market includes real estate franchises, independent contractors and e-commerce, none of which were contemplated in the existing Act. We have lobbied hard for several years to get changes to the Act. This proposed new legislation is a major milestone in the association's ongoing efforts to enhance consumer protection and reflect the reality of today's sophisticated marketplace."

The government is seeking consumer input before it finalizes the Act and introduces it to the Ontario Legislature in the fall. The government asks anyone with comments to submit them by Sept.10, 2001.

The Consultation Draft of the Real Estate and Business Brokers Act can be read by pressing here.

For more articles by Jim Adair, please press here.