As the COVID-19 pandemic drags on, real estate salespeople and brokerages are drastically changing their operations to suit the new reality. The Real Estate Council of Ontario (RECO) is keeping members up to date about the changes required to move forward in this challenging time. Here are key points to keep in mind.
Closing dates, deposits and visits
The closing date of any real estate transaction cannot be changed unless there is a written amendment to the Agreement of Purchase and Sale (APS), with both parties signing on. While it is hoped people will show flexibility and understanding during this lockdown, some brokerages have taken steps to develop and recommend clauses that facilitate COVID-19 related delays. Consider seeking legal advice before including such a clause.
If a party paid a deposit for a real estate transaction that failed to go ahead because of the pandemic, that issue must be resolved through an agreement between the buyer and seller, with assistance from real estate salespeople and legal counsel. The distribution of deposits may only occur by agreement between the parties or by court order. It’s important to keep in mind the law relating to contracts is still in place. If a purchaser fails to close on the transaction, it may be considered a breach of the agreement. This means the vendor may have a right to hold on to the deposit and seek damages. Vendors and purchasers should seek advice from their realtor and lawyer to try to find a solution and minimize the repercussions of failed transactions. Realtors should continue to support their clients to find solutions and mitigate their risk. Find more information for realtors here.
Showings and open houses
The provincial government prohibits in-person open houses during this health crisis but private viewings are still allowed. Real estate professionals should explain to clients the marketing benefits of hosting an open house by using online technologies to show the inside of the house. Before doing an in-person showing, consider asking potential buyers to fill out a questionnaire detailing recent travel history and whether they are displaying any COVID-19 symptoms. This information should be shared with the property owner. Some brokerages have created forms for this purpose, but remember that under the Personal Information Protection and Electronic Documents Act, this information can only be used for the purposes for which it was collected. On the day of the showing, be sure to wash your hands thoroughly before entering the home. A registrant must accompany the client and neither of you should touch surfaces or anything else in the home.
Those who choose to not offer in-person showings must explain the circumstances to clients and give alternatives. If those don’t suit your client’s needs you may need to cancel your agreement with them. If the listing agreement stipulates an open house will be provided, explain to the client this part of the contract now violates provincial regulations, then discuss options. Speaking to a lawyer can help you navigate this situation.
Dealing with properties with tenants
Landlord and tenant rights are spelled out in the Residential Tenancies Act, including the provision that tenants must allow for units to be shown if proper advance notice is given. The landlord’s consent is required for any actions involving tenants and everyone must fully understand the risk of transmission associated with in-person showings.
If a tenant was issued an eviction notice prior to the current health crisis but is still in the unit, that order cannot be fulfilled since the province’s COVID-19 measures include a ban on evictions. Again, all parties are encouraged to approach such situations with flexibility and understanding. Guidance is also available from the Landlord and Tenant Board.
Short-term accommodations
When drawing up its list of essential workplaces during the lockdown, the Ontario government stated that “every person who provides short term rentals in rental accommodations shall ensure that any rentals booked after April 4, 2020 are only provided to individuals who are in need of housing during the emergency period.”
Brokers and salespeople have to rely on their best judgment to determine whether a person is in need of housing or if they have other motives. The obligations for registrants who facilitate short-term accommodation rentals continue to apply, as detailed here.
Funds and verification
Electronic funds transfers (EFTs) are a great way to reduce in-person contact in real estate transactions, with brokerages required to provide a proper audit trail for each transfer in and out of their accounts. Although the Real Estate and Business Brokers Act does not have rules that deal specifically with EFTs, there are requirements related to the records that brokerages must keep when trust money is received or disbursed.
Real estate developers, brokers and sales representatives must fulfill specific obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to help combat money laundering and terrorist financing in Canada. One of those obligations is to verify the identity of the person signing a contract, and the Financial Transactions and Reports Analysis Centre of Canada says there are three ways to do that without meeting in person.
- Government-issued photo identification. The person should be asked to scan valid government ID and send it to you. You must then verify the person matches that ID through a live video chat or by having them send in a selfie. Facial recognition technology can be helpful to compare the features of that selfie to the photo on the government-issued photo identification document.
- Have a Canadian credit bureau provide information for identification purposes. This option is a reasonable option, but it is recommended that it is used in conjunction with viewing the identification and meeting the person in a video call.
- Review two reliable government-issued documents. These should be two reliable documents, such as a birth certificate, insurance document or marriage certificate. Information on these methods can be found here.
Offices are still open
Deemed an essential service, brokerage offices can do business in the pandemic with staff working on-site as long as they follow health authority guidelines about physical distancing and regular handwashing. Likewise, land registry offices are allowed to be open so that property transactions can be completed.
These are challenging times. Keeping checking the RECO website for updates and feel free to contact me for legal guidance as together we navigate these unchartered waters.
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