On December 12, 2013, Ontario passed Bill 55 The Stronger Protection for Ontario Consumers Act, 2013. This act amends the Real Estate and Business Brokers Act. Two of these revisions deal with Offers to buy real estate.
Here is what it regarding for Offers to Purchase:
“35.1 (1) No registrant shall,
“(a) while acting on behalf of a purchaser, present an offer to purchase real estate except if the offer is in writing;
“(b) represent to any person that a written offer to purchase real estate exists except if the offer is in writing.”
Clearly an offer must be in writing.
Brokerages to Keep Written Offers
To help guard against “phantom offers” and subject to new regulations, the 2nd part of this amendment directs listing brokerages to retain copies of written offers that they receive or other prescribed documents related to those offers if needed for verification.
The Agreement of Purchase &Sale is at least 6 pages.
The Ontario Real Estate Association proposed a cover page to the Agreement of Purchase & Sale to cut down on the hundreds of pages that Brokerages would be required to save. The cover page “would provide information about the property, the buying and selling brokerages and when the offer was presented.”
On investigating an accusation of a “phantom offer”, RECO, the industry regulator, would be given copies of these cover pages to verify the existence of written offers.
This brings up the question as to whether this cover page or other prescribed document would provide an offer presentation acknowledgement signed by the seller as proof of presentation.
Do the Amendments Go Far Enough?
On November 22, 2013, REM Magazine published an interesting article written by Vito Campanale, Broker of Record for Century 21 First Canadian Corp. in London, Ont. Mr. Campanale questioned whether this new legislation goes far enough and whether it guards against phantom offers with “Mere Postings.” These are essentially private sales posted on MLS in which the listing brokerage offers no other services, plays no part in offer presentations and instructs buyer sales reps to deal with the seller directly. Other limited service brokerage models may also play no part in offer presentations.
Mr. Campanale argues that, in such circumstances, there is no protection in the new amendments for buyers and their representatives. He states, “…there is no consequence to the listing brokerage since they choose not to be involved in the offer process, if the seller tells the buying agent that the buyer is competing, when in fact they are not.” He suggests making all listing brokerages responsible for offer presentation or at least be responsible for coordinating offer presentations to sellers.
What the new regulations to the amendments will include remains to be seen. In the meantime, our company has started to retain all offers received on our listings.
We’ll keep you posted.