Conduct & Trade Practices FAQs

STEP ONE: If not already obtained, any additional documents required for buyers such as: Working with the Real Estate Industry form, Buyer (Designated) Brokerage Agreement, Customer Status Acknowledgements, etc. Subscribe Share Past Issues Translate would need to be completed with the new buyer.

STEP TWO: Complete an amendment to the APS, adding the new buyer. The following clauses for the amendment clearly outline the addition of the new buyer (insert the individual’s name where the clauses reference [new party]): “a. [New party] is entering into the amendment to become a party to the agreement of purchase and sale (“the Agreement”) dated* the [date] day of [month] between [name of originally listed buyer] as buyer and [name(s) of seller(s)] as seller. The Agreement and the existing parties to the Agreement are entering into this amendment to accept the [new party] being added to the Agreement as buyer; and” “b. [New party] confirms their acceptance of all of the terms of the Agreement. *Date refers to the date of acceptance.

STEP THREE: The added buyer and all of the original parties must all sign the amendment to the APS consenting to the additional buyer being added.

STEP FOUR: (Optional) Have the added buyer initial and date the bottom of each page of a copy of the original APS, the PDS, the Schedule of Leased/ Rented Equipment and any other relevant real estate documents, as evidence that the new buyer clearly read and understood all terms.

Read the full approved policy on 'Coming Soon' advertising. The approved policy for 'Coming Soon' advertising would be applicable to any advertisement for a property where:

• the property is not already subject to an effective brokerage agreement;
• the property is not entered into the MLS® system;
• the property is not available for general showings or open houses;
• the property is not otherwise given full exposure to the market; and
• the licensee anticipates a property will be listed for sale and advertises it on a limited basis as ‘coming soon’.
• Any agreement to offer ‘Coming Soon’ advertising does not constitute a brokerage agreement or service agreement.

The Commission does not have a mandatory form to offer 'Coming Soon' advertising to a seller, however Brokerages may create their own. Any agreement that is used for this purpose must include:

• the name of the brokerage;
• the name of the seller(s)
• the fee charged, if applicable; and
• an expiry date.
• The approved policy states that offering or agreeing to offer ‘Coming Soon’ advertising for a seller must be in writing, but does not obligate the seller to enter into a brokerage agreement or a service agreement with the brokerage.

All ‘Coming Soon’ advertisements, whether it is a social media post, a lawn sign or an online ad, must include the following:

• the full brokerage name; and
• the following qualifying statement identifying that the property is not currently on the market: “This is not an offering for sale”.

(January 8, 2021) Advertising as “sold” by buyer's brokerage: If the transaction hasn’t closed, and the buyer's brokerage wants to advertise a property as “sold” (all conditions met unrelated to title), the buyer brokerage's must obtain written permission from both the buyer and seller/seller’s brokerage in order to advertise.

After the transaction has closed, the buyer's broker only needs the buyer's written permission to advertise the sale. The advertisement must clearly state the brokerage represented the buyer only in the transaction. This written permission must advise what they are advertising and an expiry date.

Advertising purchase price by buyer's or seller's brokerage: In order to advertise purchase price information, you need written permission from both parties to an agreement of purchase and sale (buyer(s) and seller(s)). This permission must advise what they are advertising and an expiry date. Note, advertising a purchase price includes the practice of stating the property sold for $X amount over list or asking price.

This number of pages line must amount to only the pages forming and attached to the agreement at the time it was written, which includes Part I, Part II and any attached schedules or addendums.

What isn’t included in this page number and does not form part of the Agreement of Purchase and Sale? Some examples are: a Counter Offer, Property Condition Disclosure Statement or a Transaction Brokerage Agreement.

Details must be documented clearly when a cash back to a buyer or an inducement is offered by the brokerage(s) to complete a transaction. When documenting cash backs, make sure you record not only the amount of the cash back, but also how and when the cash back will be provided to the buyer.

To offer a cash back, the purchase price could be reduced by the cash back amount and the seller could provide the buyer with a cheque or a money order, or any other arrangement agreed to in writing by the buyer and seller. Documentation of the cash back also must be provided to the buyer’s financial institution.

An inducement is a reward to a buyer or a seller on a specific transaction that results in the completion of that transaction. In this situation, a brokerage (or brokerages) offers an arrangement specific to the transaction to facilitate the closing of the transaction. For example, a brokerage may offer to provide new appliances to a buyer if they proceed with the purchase or offer a commission reduction to a seller. As with documenting cash backs, you need to have a written record of the inducement and how and when it will be delivered

(August 14, 2020) The use of 'Coming Soon' advertisements is for advertising properties that have not been listed. Next time you take to advertising on social media to highlight an anticipated future listing, have your broker review the ad and take a moment to ensure what you are displaying meets the Commission's Board of Director's approved policy setting minimum standards for 'Coming Soon' advertising and promotions. View the full policy HERE.

Handeling competing offers is different depention on whether you are representing the seller or the buyer. For indepth information, read our full article.

The Signature of Brokerage Representative line at the end of brokerage and service aggrements is to be signed by the licensee working with the consumer; a typed in name is not sufficient.

When using WebForms, you may encounter instances where it automatically inserts industry members names into that line. In this instance, delete the inserted text and physically sign the line when filling out the form.

The remuneration clause has been modified to suit a variety of business models. No matter whether a brokerage charges a flat fee, a percentage, a range, or a combination of any of those options, two blank lines have been used for flexibility. It is important to note, however, that licensees’ fiduciary duties require that the amount the brokerage is to be paid be disclosed to the buyer.

If that amount is unclear at the time the brokerage agreement is completed, or if the remuneration changes prior to the facilitation of an offer (i.e. a range to a set fee), the brokerage agreement must be amended to reflect the accurate remuneration once that remuneration amount is known.

(February 15, 2022). The Canadian Armed Forces base in Greenwood has contacted the Commission with an educational reminder for licensees who may use drones to take videos or photos of properties. There are potential safety concerns when flying in or near aircraft control zones without permission. Drone apps or websites may only use estimates and default distances, therefore drone users should be responsible and check official sources to determine what laws or regulations might apply to their drone flight. Most airports have a default 3 nautical mile area where drones are not permitted, except by permission.

The Greenwood control zone (surface to 5000 feet above ground level) extends to 7 nautical miles (approximately 13 km) from the centre of the airfield. Any drone operator wanting to operate their drone in this area needs to get prior permission from 14 Wing Operations (902-765-1494 ext. 5457), and be in contact with the Air Traffic Control tower while doing their flight.

In real estate transactions…

• independently trade or attempt to trade in real estate (see definition of trading);
• review, interpret, discuss or explain listings, offers, contracts, service agreements or brokerage agreements with anyone outside the employ of the brokerage, including clients and customers of the brokerage;
• present and sign (outside of witnessing) any documents relating to a real estate transaction including service agreements and brokerage agreements on behalf of the brokerage;
• assist a consumer to negotiate any terms of a real estate transaction; or
• act in an agency capacity on behalf of a consumer.

In working with real estate licensees…

• host open houses on their own (all consumer inquiries must be directed to the licensee);
• attend property inspections in the place of a real estate licensee;
• advertise in conjunction with a real estate licensee without disclosing unlicensed status; or
• relay any information to clients or customers of the brokerage that could be considered a comparative market analysis (only factual, advertised listing information can be provided to consumers on a specific property).

(July 2, 2021) This is a reminder to the industry that the use of escalation clauses in an Agreement of Purchase and Sale (APS) violates Section 30 (d) of the Real Estate Trading Act, therefore licensees cannot use them when preparing offers. An escalation clause is a formula used in place of or in addition to an actual purchase price, i.e. $X amount over the highest price offered in competing APSs. Recording a purchase price in an APS and then adding an escalation clause in an addendum or schedule does not comply.

An excess trust deposit is when the deposit held in a brokerage’s trust account for a transaction is greater than the remuneration owed to the brokerage. When an excess trust deposit exists, the Seller or their lawyer will request the excess trust deposit to be released to the Seller’s Lawyer’s trust account prior to closing in order to facilitate the closing.

When using the Commission’s Agreement of Purchase and Sale, the Buyer and Seller consent to the early release of excess trust funds in clause 1.3 of the Agreement. Clause 1.3 states:

• “The Buyer and Seller agree that any deposit held in trust by the Brokerage per clause 1.1 that is in excess of the remuneration (including HST) owed to that Brokerage on closing of the transaction, shall be transferred to the Seller’s lawyer’s trust account once conditions unrelated to title have been met. These funds shall remain in the Seller’s lawyer’s trust account until closing.”

When NOT using the Commission’s Agreement of Purchase and Sale, and the Seller or their Lawyer requests excess trust funds prior to closing:

• The Brokerage holding the trust funds must have mutual written consent with bona fide signatures from ALL parties (Buyer and Seller or their respective lawyers) prior to disbursing the funds from their trust account. An Amendment to the Purchase and Sale Agreement or another written form (emails are not sufficient) that gives clear instruction all parties will satisfy this requirement.

Useful Information
When not using the Commission’s Agreement of Purchase and Sale and the broker holding the funds requires written mutual consent (an Amendment), refer to the clause book which includes a clause that can be used in excess trust deposit situations.

If a date in a contract needs to be extended, whether it is financing, inspection, duration, etc. the extension must be done, in writing, before the original deadline passes.

The compliance inspectors, through the course of inspecting transaction files, have seen instances where brokerage agreements were amended to extend the length of the contract, but the amendments were created and signed after the original seller brokerage agreements expired. This is just plain wrong. When a contract expires, it ceases to exist. And, you cannot amend something that no longer exists.

(February 15, 2022) The handling of multiple offers is defined in by-law 702, Article 12: An industry member shall present all written offers and counter-offers as objectively and quickly as possible. This must be done within the specified timeframes or a written extension must be obtained. An industry member shall not withhold or delay the presentation of an offer without the express written consent of the client.

When there are multiple offers, an industry member acting on behalf of the seller must disclose to all potential buyers or their agents that there are multiple offers, unless otherwise instructed by the seller in writing, but must not disclose to any other person the specific terms and conditions of other offers. Whether to disclose a multiple-offer situation to respective buyers is entirely up to the seller. The decision on whether to disclose is documented in clause 8 of the Seller Designated Brokerage Agreement or clause 6 of the Seller Brokerage Agreement. The seller's representative must follow the seller’s lawful instructions.

Should a seller change their mind regarding whether to disclose that there are multiple offers, the Brokerage Agreement must be amended accordingly.

In summary, if you are the seller's representative and have received multiple offers and have instruction to disclose to competing buyers:

• Inform the seller immediately.

• Provide all offers and recommend the seller review every offer prior to making a decision.

• Do not disclose specific terms or conditions of the offers, either directly or implicitly, to any of the competing buyers or any other persons.

• Disclosing specific terms or conditions of multiple offers, either directly or implicitly, to respective competing buyers or any other persons is a violation of Commission by-law 702, Article 12.

For example, do not disclose:

• Price
• Closing date
• “You are in the top three”
• “Other offers are higher”
• “Do you want to increase?”

These are all violations of by-law 702, Article 12.

Compensation must flow from the brokerage to the individual licensees or the individual approved sales corporations. Remuneration cannot be paid to a member of the team and then distributed to the team members because all service contracts are between the consumer and the brokerage.

The licensees with the brokerage are not parties to any contracts entered into between them on behalf of the brokerage and the consumers who have engaged the brokerage services. A review of applicable case law also demonstrated that licensees are only entitled to compensation from the brokerage with which they are licensed.

(May 18, 2021) When listing a property, a seller may instruct their licensee to require all offers to be left open until a set date. The seller can specify that those offers not be delivered until a set date with the intention of reviewing all offers at once or that offers can be delivered at any time, but must be left open until that set date. Record the seller’s instructions in the Seller Brokerage Agreement/ Seller Designated Brokerage Agreement.

A pre-emptive offer (also known as “bully offer”) is an offer that expires prior to the date specified by the seller. Regardless of the date set by the seller, the seller can choose to review the pre-emptive offer and accept, reject, counter, or not respond. Likewise, the seller can, at any time, accept, reject, or counter any other offer received.

The seller’s licensee is to ensure their client’s interests are protected and to advise them of the possible implications when considering acceptance of any offer prior to the date set by the seller. If there is a lot of interest, it may be best for the seller to wait until that set date.

If a seller receives a pre-emptive offer, they are not obligated to wait to have showings and additional offers. The seller can decide how and when they want to receive offers. If a seller wants to review a pre-emptive offer, they can direct their licensee to amend the Brokerage Agreement to include pre-emptive offers.

There is nothing restricting the buyer’s licensee from submitting a pre-emptive offer on behalf of their client; however the buyer’s licensee is to ensure their client’s interests are protected.

Buyers must be aware that a seller can decide to ignore any offer, including a pre-emptive offer, that is submitted for their property. Further, a buyer who submits a pre-emptive offer may provoke a negative reaction from the seller because it does not follow the seller's offer instructions.

The Commission By-law outlines the obligations that licensees are required to fulfill as part of their agency relationship with either a buyer or a seller, including: promoting the interests of their client, obeying all lawful instructions, assisting in negotiating favourable terms and conditions, and presenting all offers or counter-offers in a timely manner.

When buying real estate, the onus is on the buyer to ask questions if something is specifically important to them rather than relying on a licensee to anticipate their needs.

Buyers may have specific areas of concern that would cause them to avoid a property that does not include cosmetic or structural issues. These intangible attributes to a property may cause it to be considered “stigmatized,” meaning it has had a traumatic or horrific circumstance occur in or near it, but does not specifically effect the appearance or function of the property itself.

See our full article on how to deal with stigmatized properties here.

(May 14, 2020) When striking a clause, the wording of the clause must remain legible. You can strike a clause by drawing a line through the text or by typing “N/A” or “Not Applicable”. After striking the clause, the clause must be initialled by all parties to the agreement. For more information on striking clauses, see The Dos and Don’ts of Struck Clauses.

(March 15, 2022) The Commission has received reports of licensees representing buyer clients who will submit offers on multiple properties at the same time, knowing that the buyer does not intend to buy multiple properties. This strategy is being used in the current real estate market in an attempt to secure an accepted offer on a property, and if more than one of their offers are accepted, they choose one property to proceed with purchasing, and terminate the other agreements using out clauses.

A licensee that engages in this practice is in violation of the Act and the By-law, specifically sections: RETA section 22(1) by-law 702(2) by-law 702(34) by-law 702(35).

When submitting an offer to a seller, the buyer is representing that they will enter into an agreement in good faith if their offer is accepted. A licensee submitting multiple offers on behalf of a client (unless their client is willing to purchase multiple properties) knows that at least some of the offers being made are not being made in good faith as there is no intention to purchase all of the properties. The fact that at the time the offers are submitted it is unclear which of the multiple offers is not made in good faith does not change the licensee’s knowledge that the buyer does not intend to be bound by one or more of the offers.

If a buyer wants to use this strategy, you must advise them that this is not a lawful instruction and violates the Act and the By-law.

Real estate contracts remain with the brokerage unless the broker and clients of the brokerage (i.e. buyer/seller) agree in writing to change the representation to the brokerage you end up transferring your licence too. It’s important to note that you cannot interfere in real estate contracts your clients signed with the brokerage.

If the broker and clients agree in writing to transfer their representation to another brokerage that is fine, but you cannot approach clients and interfere in their current contract. If your current broker agrees to pay you for your services for the transaction you facilitated, payment must be issued to your new brokerage, not to you specifically.

For more information, see our full article here.

(December 22, 2021) As previously announced by the Commission, effective January 3rd, 2022, significant changes are being made to the process of satisfying buyer's conditions in the Agreement of Purchase and Sale.

Per the changed clauses in the Agreement of Purchase and Sale, the new process will require a buyer to provide the seller or seller's agent with written confirmation (Form 408) that they have satisfied their buyer's conditions before the condition deadline. This means the buyer’s agent must confirm that their buyer is satisfied with the applicable buyer's conditions and if satisfied, complete Form 408(s), have their buyer sign it, and relay it to the seller or seller’s agent before the condition deadline(s).

If Form 408(s) is not relayed to the seller or seller’s agent by the condition deadline(s), the agreement is deemed terminated.

To view the video about the change's to buyer's conditions, click HERE.

To view all the information on the change's to buyer's conditions, including an updated Q&A, click HERE.

To view all the forms changes, click HERE. Key things to remember:

• January 3rd, 2022 is when the new process goes into effect and revised forms become mandatory.
• Buyers still have their list of conditions to satisfy and their deadline.
• There are specific conditions that are impacted by this process.
• This new form is required to waive the buyer’s conditions from the Agreement of Purchase and Sale. Failure to provide written notice of satisfaction (Form 408: Buyer Waiver of Conditions) now means the agreement shall be deemed terminated.
• Once the buyer is satisfied with their conditions, they must complete and sign Form 408: Buyer Waiver of Conditions, and provide it to the seller or seller’s agent on or before the condition deadline.
• The buyer has the ability to propose an amendment without the seller being able to trigger a termination over notice of dissatisfaction.
• The buyer still has the ability to terminate the agreement prior to the specific buyer’s condition deadline, however, the seller does not.
• Remember: No news means you lose!
• The clauses on lawyer review, title investigation and the estoppel certificate in the condo schedule have not changed, and still use the process of notice of dissatisfaction/objection.
• As a reminder, licensees are to ensure their client's lawyer is provided with all necessary real estate transaction documents including any and all competed and signed Form 408s.

Software to secure an electronic signature may be used on any service contracts or purchase agreements; however, the Commission does not promote, prefer or otherwise endorse a particular brand of electronic signature software. The broker is directly responsible to verify that any electronic signature service used to produce signatures on agreements, in the eyes of the law, creates legally binding service agreements and legally binding agreements of purchase and sale for real estate. The Commission recommends that brokers seek independent legal advice as part of this verification process.

If the brokerage chooses to make an electronic signature service available to their clients, the brokerage must retain copies of all signed agreements and acknowledgements (i.e. Certificate of Authenticity) which includes the e-signature of a client or customer of the brokerage. These certificates can be retained in either hardcopy or saved electronically at the brokerage. It is not necessary for the brokerage to retain certificates from cooperating brokerages provided it is agreed that it represents a legal signature.

For more information, see our Common Errors when using Electronic Signatures

Electronic Signatures Require Time Stamps

(May 18, 2022) Reminder to licensees that when submitting an offer to purchase or sell real estate, all signatures require the date of acceptance per section 30(2) of the Real Estate Trading Act. If using an electronic signature platform that does not reflect the date of acceptance, it is required to maintain a certificate supporting the date of accepting/signing the document.

(February 15, 2022). The Commission does not have a definition of a bedroom.

Seller's licensees must confirm the building codes for bedrooms with the respective municipality when listing properties. Houses with bedrooms that are not to code can be advertised as bedrooms; however, the advertisements must clearly indicate the bedrooms do not comply with building codes and state why, for example, window too small to allow egress.

Buyer’s licensees also have an obligation to discover facts when representing clients. If a bedroom appears to have a window that does not pass code, they are to bring it to their attention of their client and recommend they confirm with the municipality.