Ontario real estate agents are gunning for stiffer penalties and stricter enforcement of their own ethical breaches.
The Ontario Real Estate Association, a lobby group, released a policy paper Tuesday as part of a consultation with its more than 70,000 members on the province’s plans to overhaul outdated real estate legislation.
The paper is the second of five this year to pick the brains of brokers, with feedback from the documents’ proposals informing the association’s final recommendations to the government in December as part of the province’s review of the Real Estate and Business Brokers Act – virtually unrevised since 2002.
Premier Kathleen Wynne announced the two-phased review in April as part of a 16-point plan to slow the Greater Toronto and Hamilton Area's supersonic housing market.
The fresh proposals aim to deter foul play and beef up enforcement by the Real Estate Council of Ontario (RECO), an independent regulatory body.
“Ontario needs much stronger deterrents for unethical behavior and a regulator that isn’t afraid to throw the book at violators,” said association president Ettore Cardarelli – who nonetheless warned against growing pressure from “interventionist governments.”
“I think RECO, historically, has not done a great job at using fines and other kinds of deterrents to make sure that anyone who is considering breaking the code of ethics doesn’t,” added vice-president Matthew Thornton.
Proposal No. 1 is to double the maximum penalty for breaches of the industry’s legislated code of ethics to $50,000 for agents and $100,000 for brokerages. That puts the lobby group in line with the government, which floated that proposal in June.
The association's task force suggested earlier this year it wants to ramp up rules around dodgy brokering – up to a point. It proposed continuing to allow “double-ending” – where an agent represents two parties in a deal – but with more buffers against conflict of interest. The government wants to go a step further, however, banning dual repping, with a few exceptions. These could include private arrangements between family members or areas with very few agents.
Concerns around double-ending, or “multiple representation,” hinge on the notion that an agent can’t be completely loyal and impartial to both buyer and seller. Double-ending – which requires disclosure by the agent and consent by the client to go ahead – formed the basis of 45 complaints out of more than 10,000 in the first half of 2017, according to the real estate council.
A more common ethics violation in the industry involves breaching client confidentiality by, for example, telling another party what price the client said they would be willing to pay for a property.
“If a registrant somehow deceives a member of the public by virtue of their actions, that is where any industry will get a bad name,” said Brad Henderson, president and CEO of Sotheby’s International Realty Canada and a member of the association task force.
Henderson said not only should maximum fines go up, but the regulatory council should mete out those deterrents “more heavily.”
The real estate council received about 25,500 complaints in 2016; it handed down disciplinary punishments in just 0.2 per cent of cases. The $304,500 in total fines averaged out to fewer than $6,000 per agent or brokerage.
Hence the white paper’s second proposal to have the profits gained from an ethics breach repaid in part or in full, upon order of the real estate council. Otherwise, brokers could still earn a profit from foul play, even with higher fines – viewed merely as “the cost of doing business” – the proposal says.
A third policy proposal would give the real estate council the power to suspend and revoke licences. Currently, the council can only suggest that penalty to the Licence Appeal Tribunal, a body that isn’t particular to real estate.
The five other proposals are:
<ul>
<li>Permitting Ontario’s auditor general to conduct value-for-money audits of the Real Estate Council of Ontario;</li>
<li>Making all RECO registration fee bump-ups subject to ministerial approval;</li>
<li>Placing RECO under the oversight of an internal ombudsman;</li>
<li>Giving RECO the power to proactively investigate legal and ethical violations; and</li>
<li>Subjecting RECO to freedom-of-information legislation.</li>
</ul>
The first phase of the government review, which the real estate association hopes to inform, <a href="http://www.qpbriefing.com/2017/06/26/ontario-proposes-tougher-conflict-of-interest-rules-for-real-estate-agents/">mainly concerned double-ending</a> and is expected to result in rule changes this fall.
Phase two, a broader look by the government at how to rewrite the Real Estate Business and Brokers Act, is expected to stretch into 2018, with three more white papers en route from the real estate association.
The 2002 act was authored by former Progressive Conservative leader and then-consumer services minister Tim Hudak, who now serves as the chief executive officer of the Ontario Real Estate Association.
To contact the reporter on this story: 
<a href="mailto:creynolds@qpbriefing.com">creynolds@qpbriefing.com</a> 
416-212-5816 
Twitter: <a href="https://twitter.com/ChrisAReynolds">@ChrisAReynolds</a>

Real estate agents want harsher penalties – against themselves

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