Canada: Real Estate and Business Brokers Act, 2002 Becomes Law

If you or your organization are engaged in the trading of or in real estate, you will be interested in this quick brief of new legislation. For your convenience, we have included a link to the full legislation below.

Real Estate and Business Brokers Act, 2002:

On March 31, 2006, the Real Estate and Business Brokers Act, 2002 (REBBA 2002) will finally become law in Ontario. REBBA 2002 and its accompanying regulations will replace the current Real Estate and Business Brokers Act and create a new legislative framework for the registration and regulation of all brokerages, brokers and salespersons who engage in the trade in or of real estate, including leasehold interests.

REBBA 2002 will affect, subject to the specified exemptions listed below, all corporations, partnerships, sole proprietors, associations or other organizations or entities and their employees that trade in real estate on behalf of others for compensation or reward. The legislative provisions will capture real estate brokerages engaged in the purchase, sale and leasing of real estate as well as commercial property managers, leasing brokerages and asset managers that engage in the trade in and of real estate as part of their business activities.

Notable Changes:

REBBA 2002 introduces a number of key changes which will impact people and corporations that engage in the trade of real estate. The most notable changes include:

  • enhanced disclosure requirements relating to the representation of multiple parties to the same trade in real estate;
  • requirements regarding the operation of real estate trust accounts, including provisions regulating the use of unclaimed trust funds;
  • prohibitions against the falsification of registration information;
  • brokers and salespersons will be required to complete educational courses in order to meet prescribed requirements for registration and renewals of registration;
  • prohibitions against registrants holding themselves out as specialists unless they have obtained the appropriate certification;
  • introduction of a revised Code of Ethics which now forms part of the legislation and therefore applies province-wide;
  • provisions requiring that brokerages ensure that the brokers and salespersons they employ carry out their duties in compliance with REBBA 2002 and the revised Code of Ethics;
  • provisions which permit the Registrar to deal with complaints about registrants, including increased inspection and investigatory powers and the authority to immediately suspend an agent’s or broker’s registration; and
  • establishment of a discipline committee with the authority to fine individual registrants up to $25,000 or freeze the assets of registrants who have breached the Code of Ethics, as well as the authority to fine individual registrants up to $50,000 and corporate registrants up to $250,000 that are convicted of an offence under REBBA 2002.

Registration Requirements:

REBBA 2002 prohibits a person or corporation from trading in real estate unless they are registered by the Real Estate Council of Ontario (RECO). This prohibition applies not merely to brokerages, brokers or salespersons, but also captures any person involved in the trade in or of real estate.

Continuance of Registration During Transition

Any brokerage, broker or salesperson currently registered by RECO to trade in real estate will be deemed to be registered under REBBA 2002, and no subsequent registration will be required in order to comply with the new registration requirements. If, however, your organization or any of its employees trade in real estate and is not registered with RECO as a brokerage, broker or salesperson, it will be necessary to satisfy the pre-registration requirements as set out by REBBA 2002 and RECO.


In order to become a registrant under REBBA 2002, it is necessary to complete the pre-registration requirements as prescribed by RECO. These requirements include three pre-registration courses (as administered by the Ontario Real Estate Association), payment of the registration fee ($250 - $300), and participation in the RECO Insurance Program. For more information on registration or to obtain the necessary registration forms, please visit the RECO website at

Exemptions to the Registration Requirements:

REBBA 2002 provides a number of exemptions from the registration requirement. These exemptions include, among others, a trade in real estate by:

  • certain assignees, custodians, liquidators, trustees or other persons acting under specific legislation or under the order of any court;
  • a full-time salaried employee of a new home builder or developer who is acting for or on behalf of his or her employer in respect of property situated in Ontario;
  • a lawyer who is providing legal services if the trade in real estate is itself a legal service or is incidental to and directly arising out of the legal services;
  • a person’s personal interest in real estate, unless the trade results from an offer of the person to act or a request that the person act in connection with the trade for or on behalf of one of the other parties to the trade; and
  • a person who trades in real estate solely for the purpose of arranging leases to which the Tenant Protection Act, 1997 applies, such as residential leases.

If you are engaged in the trade in or of real estate, you should become familiar with the new legislation – including the revised Code of Ethics – to ensure that you conduct your affairs in accordance with the new requirements.

Stephen Morris is an associate in Osler’s Business Law Department, Real Estate Practice Group, in Toronto. Adrian Hartog is a partner in the Toronto office, where he practises commercial transaction law with an emphasis on acquisition, development, financing, leasing and disposition of real estate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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