Professional Real Estate Corporations – if you’ve never heard of one, that’s ok. PRECs have been in B.C. for a few years now, and from what I understand about them is they help certain agents get paid as a company rather than a person.
The Ontario government is currently reviewing a bill that would allow REALTORs in Ontario to operate as a professional real estate corporation rather than a sole proprietor.
Also included in this bill are measures to further protect consumers in real estate transactions mainly in the form of how agents are allowed to advertise.
Again, using B.C. as the example, the advertising changes will simply make sure an agent operating as a PREC, would have that disclosure somewhere conspicuous in their advertisements, like we do now, by showing we are either operating as a salesperson, sales representative, or broker.
Below are excerpts I received in an email from the Real Estate Council of Ontario regarding PRECs:
Government Launches Consultation on Incorporations and Advertising Terms
Industry urged to participate in consultation
In March 2020, the Trust in Real Estate Services Act, 2020 (TRESA 2020) received Royal Assent. TRESA 2020 is legislation that once proclaimed will update the Real Estate and Business Brokers Act, 2002 (REBBA). The changes in TRESA 2020, once in force, will support and strengthen consumer protection and professionalism in the real estate sector. This is good news for consumers and the profession, as both will benefit from modernized legislation.
On August 17, 2020, the Ontario Government launched a consultation on the first phase of draft regulations required to bring some of these legislative changes into force. At this time, they are seeking feedback from registrants, members of the public and other stakeholders on the following two issues:
- Personal Real Estate Corporations (PRECs), which effectively will allow remuneration owing to salespersons to be paid to a corporation owned by the salesperson. The regulations set out the criteria to describe what a PREC is and the conditions that must be met for the PREC to qualify for an exemption from the requirement to be registered under the Act and to receive the salesperson’s remuneration from the brokerage; and,
- Changes to the existing Code of Ethics regulation to expand and clarify the terms that registrants may use in their advertising when referring to brokers and salespersons.
Further details, including a copy of the proposed regulations, can be found on the Ontario Regulatory Registry’s website here.
RECO welcomes this review and urges registrants and other industry stakeholders to contribute to the consultation.
The deadline for submissions is September 8, 2020, by 11:59 p.m.
The ministry is proposing that the regulations, if approved, would come into force on October 1, 2020.
In Ontario, incorporation is allowed to many other regulated professionals including doctors, lawyers, architects, engineers and accountants.
Ontario real estate agents are currently prevented by the Real Estate and Business Brokers Act (REBBA) from incorporating their businesses through a PREC.
I see this as a welcome change because real estate is a highly regulated industry by government and, REALTORs are professionals in their field of trade – well, most of us are anyway.
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