Mar 4, 2016 | CREA/OREA/RECO News |
From the Registrar’s Bulletin, December 1, 2015 – reprinted with permission
(For information on commission rebates, see the Registrar’s Bulletin “Commission rebates to clients and customers.”)
When you use commission reductions, it is essential to create an appropriate agreement in order to comply with the Real Estate and Business Brokers Act, 2002 (REBBA 2002).
In a commission reduction agreement, the listing brokerage agrees with the seller to reduce commission that was previously agreed to. The following are the two most common ways this can happen:
- The seller and buyer are represented by the same brokerage.
- A cooperating (buyer’s) brokerage offers to reduce its commission and the listing brokerage and seller agree to reduce the total commission payable under a seller representation agreement, i.e. offers to accept less commission.
All commission reduction agreements negotiated by brokers and salespersons are binding on the brokerage. If commission reduction agreements are being offered, the details must be put in writing, and provided by the broker or salesperson to their brokerage. Any commission reductions should be in keeping with the brokerage’s policies. But in any case, the brokerage is bound by commission reduction agreements made by its employees in its name.
Most commonly, commission is paid to the brokerage representing the seller under a written seller representation agreement, which may include an agreement to pay a portion of the total commission to a cooperating brokerage that represents the buyer. However, it’s important to note that specific commission models are not mandated under REBBA 2002. Various commission models are acceptable as long as they comply with the law.
Section 25 of the Code of Ethics contains provisions that apply to commission agreements between a brokerage and a seller and offers or proposals to amend them. If the brokerage representing the seller and the seller agree to commission terms that may affect whether one offer would be accepted over another, then the brokerage representing the seller must disclose the details of such terms to anyone who makes a written offer to buy.
This typically occurs in one of two ways:
- Buyer and seller represented by the same brokerage: The brokerage representing the seller offers to reduce commission if the buyer is also represented by the same brokerage (multiple representation). A detailed disclosure must be made to everyone who has made a written offer at the earliest practicable opportunity, and before any offer is accepted. The listing brokerage must put this commission amending agreement in writing.
- Buyer represented by a separate cooperating brokerage: The following are typical steps when a cooperating brokerage offers (proposes) to reduce its commission.
A cooperating brokerage representing a potential buyer proposes to reduce its commission to make that buyer’s offer more attractive.
This would cause a reduction in the total commission payable to the brokerage representing the seller. By accepting that buyer’s offer the seller will receive a higher “net” value for the property than they would receive if they paid the commission that they originally agreed to.
Detailed disclosure must then be made to everyone who has made a written offer. The disclosure must be made at the earliest practicable opportunity, but before any offer is accepted. The brokerage representing the seller also needs to provide a written copy of the amendment to the written seller representation agreement to the seller in the event this offer is accepted.
“Detailed” disclosure, as set out in Section 25, means disclosing the terms of the agreement relating to commission and that may affect whether an offer to buy is accepted. The complexity of the disclosure depends on the terms. For example, if the commission reduction agreement is a simple percentage reduction without any limitations or conditions, that is what must be disclosed. More complex reductions would require more detail. The best practice is to disclose in writing to ensure clarity and to create a record of the disclosure.
Commission reduction agreements can be a way to facilitate a transaction. However, registrants have a duty to ensure that the promotion, documentation and delivery of a commission reduction are done in a manner that complies with REBBA 2002. Failure to do so could result in disciplinary or other legal action.
Feb 5, 2016 | CREA/OREA/RECO News |
From the Registrar’s office ….
In response to registrant feedback, RECO is making changes to further help registrants comply with regulations, starting with a new process to review advertising before it is published.
A new Registrar’s Bulletin describes a new procedure whereby RECO will review registrant advertising before it is published. RECO will review the advertisement when asked to do so by a Broker of Record. The bulletin also introduces a new process for registrant-based complaints about advertising. All registrants should review the bulletin as soon as possible.
The changes are intended to:
- Elevate advertising compliance;
- Promote accountability for brokerage advertising among brokers of record; and,
- Encourage registrants to settle more disputes amongst themselves before taking a complaint to RECO.
The changes took effect January 1, 2016.
Jan 8, 2016 | CREA/OREA/RECO News |
From the Registrar’s office
In response to registrant feedback, RECO is making changes to further help registrants comply with regulations, starting with a new process to review advertising before it is published.
A new Registrar’s Bulletin describes a new procedure whereby RECO will review registrant advertising before it is published. RECO will review the advertisement when asked to do so by a Broker of Record. The bulletin also introduces a new process for registrant-based complaints about advertising.
All registrants should review the bulletin as soon as possible.
The changes are intended to:
- Elevate advertising compliance;
- Promote accountability for brokerage advertising among brokers of record; and,
- Encourage registrants to settle more disputes amongst themselves before taking a complaint to RECO.
The changes took effect January 1, 2016.
Jul 7, 2015 | CREA/OREA/RECO News |
Congratulations to Mike Cusano (RE/Max Escarpment Realty Inc.) on his re-election as Region 2 Director on the RECO Board of Directors.
Jun 2, 2015 | CREA/OREA/RECO News |
Earlier this spring, RECO issued an e-blast to brokers of record and branch managers regarding new rules for handling written offers, stemming from Bill 55, the Stronger Protection for Ontario Consumers Act, 2013. In response to feedback from brokers of record and branch managers, RECO has updated the fact sheet.
Bill 55, the Stronger Protection for Ontario Consumers Act, 2013, takes effect on July 1, 2015 and there are new rules you must know for handling written offers. Your brokerage must create processes and policies that comply with these legislative changes.
RECO has prepared a detailed fact sheet about the changes. All registrants should review it so that they can ensure compliance as of July 1, 2015.
Here is an outline of the changes:
- Offers must be made in writing. Please keep in mind that a written offer must be signed to be valid.
- A registrant cannot indicate that they have an offer, unless they have a written offer.
- The seller’s brokerage must keep a record of all written offers that it receives.
- RECO is developing a process to confirm the number of offers that were received for a property.
- RECO will provide updates between now and July 1 in response to questions that registrants submit.
To review the relevant changes, see section 35.1 of REBBA 2002 and section 19.1 of Ontario Regulation 579/05 made under REBBA 2002.
(Note: OREA will design a new form for brokerages to use to comply with the requirements of Bill 55. See following article and stay tuned for more information.)
May 7, 2015 | CREA/OREA/RECO News |
| Effective August 1, 2015, RECO will begin sending electronic registration renewal reminders and will phase out the post card reminder. Moving to electronic will allow RECO to provide registrants with multiple reminders to help everyone renew on time, avoiding any unnecessary interruptions to registration. The initiative is a more sustainable approach, saving the thousands of post cards issued annually.It’s critical that RECO has an up-to-date email address for all registrants. Please ensure that RECO has your correct email address! Update your email address with RECO by using MyWeb. |
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Apr 6, 2015 | CREA/OREA/RECO News |
Effective August 1, 2015, RECO will begin sending electronic registration renewal reminders and will phase out the post card reminder. Moving to electronic will allow RECO to provide registrants with multiple reminders and help everyone renew on time, avoiding any unnecessary interruptions to registration. This measure will save on the thousands of post cards issued annually.
It’s critical that RECO has an up-to-date email address for all registrants. Please ensure that RECO has yours! Update your email address by using MyWeb.
Mar 23, 2015 | CREA/OREA/RECO News |
Earlier in March, RECO issued an e-blast to brokers of record and branch managers regarding new rules for handling written offers; the new rules stem from Bill 55, the Stronger Protection for Ontario Consumers Act, 2013. In response to feedback from brokers of record and branch managers, RECO has updated the fact sheet.
New rules for handling written offers come into effect on July 1, 2015. Your brokerage must create processes and policies that comply with these legislative changes.
RECO has prepared a detailed fact sheet about the changes. All registrants should review it so that they can ensure compliance as of July 1, 2015.
Here is an outline of the changes:
• Offers must be made in writing. Please keep in mind that a written offer must be signed to be valid.
• A registrant cannot indicate that they have an offer, unless they have a written offer.
• The seller’s brokerage must keep a record of all written offers that it receives.
• RECO is developing a process to confirm the number of offers that were received for a property.
RECO will provide updates between now and July 1 in response to questions that registrants submit.
To review the relevant changes, see section 35.1 of REBBA 2002 and section 19.1 of Ontario Regulation 579/05 made under REBBA 2002.
(Note: OREA will design a new form for brokerages to use to comply with the requirements of Bill 55. Stay tuned for more information.)
Jan 9, 2015 | CREA/OREA/RECO News |
The annual election for the CREA Board of Directors will be held on March 28, 2015 at the 2015 CREA Annual General Meeting. Any qualified REALTOR® member who has
an interest in serving as a Director of CREA is strongly encouraged to run for a position on the Board of Directors.
The following positions are open:
• Three Director-at-Large positions, each for a two-year term.
• Four Regional Director positions, each for a two-year term, from each of the following regions:
·British Columbia/Yukon
· Manitoba
·Quebec
·The Atlantic Region
Candidacy forms must be received by CREA no later than January 27, 2015. Questions should be directed to Bill Harrington at 613.237.7111.
For complete information about the qualifications for Directors, the CREA elections and candidacy forms, go to http://www.rahb.ca/CREA/CREA_ElectionNotice2015.pdf
Oct 10, 2014 | CREA/OREA/RECO News |
Have you paid your RECO insurance premiums yet? Here’s a message from RECO: (more…)
Jul 8, 2014 | CREA/OREA/RECO News |
RECO unveiled its new mobile app, MyRECO Certificate, at its annual general meeting on June 19. (more…)
May 8, 2014 | CREA/OREA/RECO News |
Congratulation to RAHB past president Rebecca Ryder on her acclamation as the Region 2 Director to the RECO Board.
