CHAPTER 11 Real Estate
In recent years, Canadian lenders and purchasers have increasingly provided title insurance policies in lieu of title opinions. In a typical title insurance policy, the title insurer has a duty to indemnify or reimburse the insured for any actual losses suffered as a result of a defective title (to the extent that such defect was covered), as well as a duty to defend and pay the legal defence costs and expenses in the event of a claim that threatens the insured’s title to the property. Nonetheless, title insurance does not cover all losses and does not replace thorough due diligence. Many provinces (including Ontario and Québec) impose tax on transfers of real property (including certain leasehold interests): see the Tax Considerations chapter of this guide. Regulation of Real Estate Brokers Real estate brokers are regulated by each province in Canada. In Ontario, real estate brokers are governed by the Real Estate and Business Brokers Act, 2002. The Act is administered by the Real Estate Council of Ontario (RECO). Subject to certain exceptions, such as for Canadian banks and other financial institutions, the Act requires a person who trades in real estate to be registered as a brokerage, broker or salesperson. A brokerage is defined in the Act as an entity trading in real estate for reward. A broker or salesperson is an individual employed by a brokerage in that capacity. No broker or salesperson can trade in real estate on behalf of, or accept any commission or other remuneration for trading in real estate from, any brokerage other than a brokerage that employs such broker or salesperson.
A registered broker or salesperson must be a Canadian resident and may not trade in real estate in Ontario from an office outside Ontario. No action can be brought for commission or other remuneration for services in connection with a trade in real estate unless at the time of rendering the services, the person bringing the action was registered or exempt from registration under the Act. The Act and regulations made under it set out detailed requirements of registration for brokerages, brokers and salespersons, including compliance with a code of ethics. Brokerages must hold funds belonging to their clients (such as deposits) in separate trust accounts. If a registrant breaches any of the requirements applicable to it, RECO can impose various sanctions under the Act, including fines, freezing assets or placing restrictions on its registration. In Québec, real estate brokers are subject to similar rules. In addition, under the Real Estate Brokerage Act and the Regulation respecting the issue of broker’s and agency licences , a person applying for a broker’s or agency licence must have an establishment in Québec. Regulation of Mortgage Brokers and Lenders Mortgage brokers and lenders in Ontario are regulated by the Mortgage Brokerages, Lenders and Administrators Act , 2006 . Under this Act, no person can carry on the business of dealing or trading in mortgages in Ontario or carry on business as a mortgage lender in Ontario (which the Act defines as lending money in Ontario on the security of real property) unless the person holds a brokerage licence issued under the Act by the Superintendent of Financial Services, or is exempt under the Act.
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