TRESA Phase 2: What Changed for Ontario Real Estate

TRESA Phase 2 came into force on December 1, 2023, completing the legislative replacement of REBBA (the 20-year-old statute that previously governed Ontario real estate). Phase 2 introduced four practical changes every Ontario registrant must follow: designated representation, mandatory written representation agreements before showing properties, the RECO information guide, and an updated Code of Ethics with sharper enforcement teeth. Below is what each one actually means in daily practice — and what shows up on the Humber exam.

What is TRESA, briefly

The Trust in Real Estate Services Act (TRESA) is the Ontario statute that regulates real estate registration, brokerage operations, and registrant conduct. It replaced the Real Estate and Business Brokers Act, 2002 (REBBA) in two phases:

• Phase 1 (April 1, 2023): registration framework, brokerage licensing rules, and RECO\'s expanded enforcement powers.
• Phase 2 (December 1, 2023): the practical conduct changes — designated representation, mandatory written representation agreements, the RECO information guide, and the updated Code of Ethics.

TRESA applies to every Ontario salesperson, broker, and brokerage. RECO (the Real Estate Council of Ontario) is the regulator that enforces it. If you\'re studying for the Humber pre-registration exam, every TRESA Phase 2 change below is testable on Course 1, Course 2, Course 3, and both Simulation Sessions — the exam content was rewritten when Phase 2 came into force.

The four big Phase 2 changes

1. Designated representation

Under the prior REBBA system, when both parties to a transaction were represented by the same brokerage, the brokerage represented both — a structural conflict that required written multiple-representation disclosure and significantly limited what either side could be advised on. Designated representation solves this by treating each registrant as an individual representative with full fiduciary duty to their own client, while the brokerage takes a coordinating rather than representational role.

How it works in practice:

• Brokerage A opts into designated representation by amending its policies and notifying RECO
• Registrant Smith represents the seller; Registrant Lee represents the buyer; both work at Brokerage A
• Smith owes full fiduciary duty to seller (loyalty, full advice, advocate for best price)
• Lee owes full fiduciary duty to buyer (advocate for lowest price, all disclosure, full advice)
• Brokerage A facilitates the deal but does not itself represent either party
• Both clients still receive the RECO information guide and sign individual representation agreements

Brokerages that don\'t opt into designated representation continue under the older multiple-representation framework. Multiple representation is still legal — it just requires more aggressive disclosure and the parties consent to the limited representation each receives.

2. Mandatory written representation agreements

Before TRESA Phase 2, a buyer could be shown properties under verbal arrangements with a registrant. Phase 2 eliminates that — a written agreement is required before the registrant performs significant services for the buyer. There are two types:

• Buyer Representation Agreement (BRA): creates a representation relationship. The buyer is the registrant\'s client; full fiduciary duty applies; the buyer signs over compensation arrangements and the holdover clause.
• Customer Service Agreement: creates a customer relationship. The buyer receives information and basic services without representation. Lower duty of care applies; the agreement specifies what services are provided and what the buyer pays for.

The written agreement must specify:

• Period of representation (start and end dates)
• Geographic area covered (e.g., Toronto + Mississauga, or specific postal codes)
• Type of property covered (residential, commercial, both, etc.)
• Commission arrangement, including what happens if the listing brokerage offers less than the agreed buyer-side rate (top-up by buyer, or buyer-side rate reduction)
• Holdover clause — typically 60-90 days post-expiry
• Termination terms

For sellers, the equivalent Listing Agreement requirement was already in place; Phase 2 just standardized the language in line with the new buyer-side requirement.

3. RECO information guide

The RECO information guide is a standardized consumer education document that every Ontario registrant must review with prospective clients before signing any representation or customer agreement. It is provided by RECO and must be used verbatim — registrants cannot substitute their own marketing materials.

The guide covers:

• What it means to be a "client" vs a "customer" (representation vs. limited service)
• The difference between salesperson and broker
• Multiple representation vs. designated representation explained for the consumer
• Commission is negotiable — explicit disclosure
• How to file a complaint with RECO
• Where to find more information

Registrants must document that the guide was reviewed before any agreement is signed. RECO inspections check this consistently; failure to document is a recurring source of Code violations.

4. Updated Code of Ethics

The 2023 Code is more prescriptive than the prior REBBA Code, with broader grounds for RECO discipline. Key updates:

• Best interests duty. Registrants must promote and protect their client\'s best interests — not merely "act fairly" as the older Code phrased it.
• Conflict disclosure. Any conflict of interest must be disclosed in writing and the client\'s informed consent obtained before proceeding.
• No opinion outside competence. Registrants cannot provide legal, tax, structural, or technical opinions outside their licensed competence. Refer to qualified professionals.
• No undisclosed third-party compensation. Referral fees, lender kickbacks, contractor commissions — anything received from a third party in connection with a transaction must be disclosed.
• Continued duty of loyalty. Even after the agreement ends, registrants cannot use confidential information acquired during representation to a former client\'s detriment.
• No undue influence. Registrants cannot pressure clients into decisions or exploit cognitive vulnerabilities.

The 2023 Code is enforced more aggressively than its predecessor. RECO publishes discipline decisions monthly; the volume has roughly doubled since Phase 2 took effect. The most common violations: failure to document the RECO information guide review (#1), inadequate written representation agreements (#2), and undisclosed referral fees (#3).

What didn\'t change

For all the headline changes, several things stayed the same in Phase 2:

• The 5% conventional commission rate (still negotiable, still split typically 2.5%/2.5%)
• HST at 13% on commission (Ontario)
• Brokerage trust account requirements
• RECO insurance and registration fees
• The Humber Polytechnic pre-registration program structure
• Salesperson vs broker distinction (broker remains a separate registration tier)

Phase 2 on the Humber exam

TRESA Phase 2 changes appear heavily on the Humber pre-registration exams, especially:

• Course 1 (Essentials): the difference between client and customer, multiple vs designated representation, when a written agreement is required
• Course 2 (Residential Transactions): the BRA timing requirements, commission arrangement clauses, holdover provisions
• Course 3 (Additional Residential): Code of Ethics scenarios — conflict disclosure, third-party compensation, opinion-outside-competence questions
• Simulation Sessions 1 and 2: applied scenarios where you must identify which TRESA disclosure applies, what timing is required, and what the registrant should do next

Scenario questions are the highest-leverage practice area. They test whether you can match a fact pattern to the correct Phase 2 rule, not just recall the rule itself.

FAQs

Related on ExamAce

• TRESA — full glossary entry
• RECO — the regulator enforcing TRESA
• How commission and Phase 2 disclosure interact
• Broker registration under TRESA
• Humber courses with TRESA-aligned practice questions