You may not think of it at first, but buying or selling real estate in Canada is an extremely serious matter. The ins and outs of Canadian real estate law can be complicated, which is why Realtors®, brokers, and real estate lawyers require specialized training and accreditation. 

Canadian real estate law is important to know or at least be aware of when you plan to buy or sell a property. However, did you know that each province has its own rules and regulations? In this post, we’re going to take a look at real estate laws in Canada, specifically Ontario real estate law. 

But first, a quick disclaimer. As with anything related to real estate law in Canada or Ontario, always be sure to consult a professional before making any decisions. This blog is only meant to be a quick Ontario real estate law guide.

Who Governs Real Estate Law in Canada?

Real estate laws in Canada are governed on a provincial basis. Each province and territory has its own set of rules and regulations. Real estate laws in Ontario are governed by the Real Estate Council of Ontario (RECO). This is an administrative authority appointed by the provincial government to regulate the conduct of real estate professionals. 

RECO administers the Real Estate and Business Brokers Act, 2002, (REBBA) which is the code of ethics that all real estate sales professionals, brokers, and brokerages must follow. The main purpose of RECO is to protect the interests of consumers and maintain a fair and transparent real estate industry. 

The federal government’s housing plan includes several provisions designed to help Canadian homeowners. Learn more about their plans here.

Key Real Estate Law Terms to Know

As you may expect, Canadian real estate transactions require a lot of paperwork. You can read more about paperwork involved in our blog here. There are contracts, inspections, and countless documents that need to be reviewed and signed. Most of these documents are written in typical contract lingo–heavy on the legalese. 

When navigating through real estate law, here are a few key terms you should know:

• Estate – A person’s interest in a property.
• Freehold Estate – This term typically refers to the ownership of a property. 
• Leasehold Estate – An estate with a defined term. For example, a rental property with a lease.
• Deed – A document signed by both the seller and purchaser of a property to transfer ownership. The deed is then used to register the property in the new owner’s name.
• Condition – An event or action that is required to happen before the agreement becomes binding. For example, a condition on financing would mean that the buyer needs to secure financing before the deal is set. 
• Equity – The value of the property over the amount of mortgage against it.
• Irrevocable – Typically a date when the contract is incapable of being changed or recalled.
• Lien – A legal claim against real estate when there is money owed.
• Title – The written evidence that an individual has ownership of a property.
• Chattels – Possessions in the property that can be moved or left behind during the sale.

This is really only scratching the surface, there are hundreds of real estate law terms. This is one of the main reasons why it’s always best to work with a professional. 

Mortgages in Canada are another big topic when it comes to real estate. Learn more about Canadian mortgages right here.

Ontario Real Estate Laws To Know When Buying or Selling a Home

Here are a few common Ontario real estate law questions we receive:

Should I Sign a Buyer or Seller Representation Agreement? 

Buyer Representation Agreements and Seller Representation Agreements, sometimes referred to as Listing Agreements, are signed contracts between you and the brokerage to retain the services of a real estate agent. These contracts are legally binding and they outline the expectations, terms, and conditions of both parties. These agreements also outline the fees (commissions) the agent will receive as a result of the sale. As a legally binding agreement, these contracts cannot be canceled without penalty. That’s why it’s important to understand every part. 

Can I Get My Deposit Back if My Conditional Offer Falls Through? 

When submitting a conditional offer on a home, you will likely pay a deposit (typically between 5-10% of the purchase price). These funds are held in trust until the conditions of the offer are met. If this does not happen, your funds are not automatically returned. You must sign an agreement and decide with the seller how the funds will be paid back.

Curious about the real estate closing process in Ontario? Learn more about what you can expect here.

Am I Allowed to Work with Two Brokerages? 

Technically, yes. However, if you sign representation agreements with two brokerages, you will also need to pay commission to both. It’s not recommended to work with multiple brokerages, and if a brokerage asks you if you are already working with someone, you’re obligated to answer truthfully. 

Are Real Estate Agents in Canada Allowed to Represent the Buyer and Seller of the Same Property? 

This is perfectly legal, however, RECO rules stipulate that the agent must be transparent and let the seller and buyer know they are representing both parties and obtain written consent that both parties are ok with it. 

Are Brokerages Legally Required to Divulge Offer Details in a Bidding War? 

This has been a hot topic recently, and the Canadian Government is currently making changes to how bidding wars in Canada are handled. Currently, seller’s agents are not obligated to tell buyer’s agents anything beyond how many offers have been made on a property. However, new bidding war rules could help improve transparency, as seller’s agents can now obtain written consent from their clients to disclose the details of the offers to competing agents.

You can learn more about Ontario rules on blind bidding right here.

Are Brokerages Allowed to Charge Additional Fees? 

Most real estate agents collect a commission on the sale of a home. This commission is then split between the seller’s agent and the buyer’s agent at a pre-determined and agreed-upon rate. However, brokerages are also allowed to charge additional fees including flat rate fees, as well as fees for services such as photography, staging, decluttering, etc. This is at the discretion of the brokerage and could vary between agents. This is another reason why it is very important to review your representation agreement in detail before signing. 

Are you looking for qualified Realtors® in Hamilton? Contact Michael St. Jean Realty today for all your home buying and selling needs. Call us at 1.844.484.SOLD or email us here.