Under Ontario’s Trust in Real Estate Services Act, 2002, a real estate professional can become someone’s legal representative without ever signing a single piece of paper. For decades, the industry standard dictated that representation began and ended with ink on a page—a buyer signing a buyer representation agreement or a seller executing a listing agreement before any professional relationship officially commenced. Until those documents were finalized, many Realtors operated under the assumption that they were simply extending a helpful hand.
However, since Phase 2 of TRESA took effect on December 1, 2023, the Real Estate Council of Ontario (RECO) has made it abundantly clear that this assumption carries significant legal risk. Under the modernized legislation, a representation agreement does not solely rely on a formal written contract; it can be written, oral, or even implied.
An implied agreement is brought into existence entirely by an agent’s conduct—by what they actually do rather than what they sign. This precarious legal trap frequently occurs by accident, usually when well-meaning agents go just a bit too far in assisting a consumer who has never executed a formal representation agreement. Understanding how these implied agreements arise, the profound legal risks they introduce for brokerages, and how professionals can safeguard their practices has become an urgent priority for real estate practitioners across the province.
Two Relationships, and No Middle Ground
A foundational shift introduced by TRESA was the complete elimination of the old "customer" category. According to RECO’s Bulletin 2.6, the legislation leaves no room for ambiguity: there is no equivalent to a customer or a customer agreement under the current regulatory framework. A buyer or seller involved in a real estate trade is strictly categorized either as a client of a brokerage or as a self-represented party. Furthermore, real estate professionals are prohibited from providing a self-represented party with services, opinions, or advice regarding the trade.
The regulatory framework also mandates strict documentation standards for legitimate relationships. Any oral or implied buyer or seller representation agreement must be reduced to writing as soon as possible, and crucially, before any prospective buyer makes an offer. The brokerage is required to sign the document and provide it directly to the buyer or seller for their signature. By statutory definition, this agreement must explicitly outline its term, the specific services to be rendered, how remuneration is calculated and paid, and any relevant termination provisions.
Yet, missing paperwork does not automatically equate to the absence of a legal relationship. As RECO’s Bulletin 2.3 emphasizes, providing services or representation in the absence of a written agreement does not prevent a representation agreement from coming into legal existence. The relationship effectively exists in practice, even if the required documentation is missing, exposing all parties to unforeseen regulatory and civil liabilities.
How an Implied Agreement Is Born
The mechanics of how these relationships accidentally materialize are detailed in RECO’s Bulletin 2.7, titled Implied Representation Agreements. The bulletin warns that a binding agency relationship can be established the moment an agent exchanges confidential information, offers advice concerning a trade, provides active services, exercises a degree of professional judgment that a consumer might reasonably rely upon, or communicates and negotiates with third parties on someone’s behalf. In essence, casual professional advice or a spontaneous opinion offered during a routine interaction can inadvertently create an implied representation agreement—and with it, substantial legal liability.
To many seasoned practitioners, these scenarios do not sound dramatic or inherently risky, which precisely underscores the core of the problem. Consider common, everyday interactions: a curious couple walks into an open house, mentions their mortgage pre-approval status and lease expiration date, and the hosting agent casually suggests they "come in a bit under list price." Alternatively, a past client’s friend reaches out via text message asking what a neighboring condominium is genuinely worth, and the agent obliges by sending over a quick comparative market analysis. In another common scenario, a seller who has never officially listed their property asks an agent to "see if your buyer is interested," prompting the agent to begin carrying offers back and forth between the parties. In each of these routine instances, the agent may have inadvertently become someone’s legal representative without realizing the gravity of their actions.
RECO notes that this inherent risk escalates incrementally with every single action taken by the agent and with every request accommodated for the consumer. Because representation agreements under Ontario law are established with the brokerage rather than the individual sales representative, any implied relationship created by an agent binds their brokerage as well.
The legislation provides only two narrow safe zones where agents can interact with consumers without triggering representation. First, real estate professionals are permitted to share general factual real estate information with anyone, such as answering straightforward factual questions about a property or handing out feature sheets during a public open house. Second, if an agent is already representing a client in a transaction, they are permitted to assist another person incidentally to that primary service, provided they strictly refrain from inviting that secondary party to rely on the agent’s professional skill or judgment.
Keeping Your Conduct and Paperwork Aligned
Ultimately, TRESA was designed to provide consumers with absolute clarity regarding who is working on their behalf and whose interests are being prioritized in a transaction. While a formal written agreement remains the gold standard for clarifying this relationship, the day-to-day actions of the parties involved can easily override intentions and establish an agency relationship by default. If a real estate professional is acting like someone’s representative in practice, the law may very well deem that they already are. For industry professionals navigating the post-Phase 2 landscape, ensuring that paperwork, mandatory disclosures, and everyday conduct all tell the exact same story is no longer just a best practice—it is an operational necessity.