This is the explanation from RECO:
“Content of competing offers
A change most of you will have heard about relates to sharing the content of competing offers.
Though the change permits a registrant to share the contents of offers under specific circumstances, this should not be confused with an “open offer process”.
What it does do is remove the prohibition on sharing the content of offers, allowing registrants, with the seller’s written direction, to share the content of offers with every person making one of the offers.
This is not unique to Ontario. Most jurisdictions allow the seller to determine whether they will share the content of offers.
A seller may direct that all of the content or only parts of the content of offers be shared.
However, registrants are prohibited from sharing the personal information of the person making the offer or any information that would identify the person making the offer.
Registrants must follow the instructions of their seller client, including any change in the instructions.
Content of offers (seller’s rep)
For example, a seller client might instruct their registrant to share the content of offers and, a few days later, change their mind and instruct their registrant not to share the information. It’s also possible a seller might instruct their registrant not to share the content of the offers and change their mind once the offers have been received.
Registrants representing a seller client should advise the seller about the benefits, risks, and impact of changing their minds.
There are no rules regarding how or when a seller’s decision to share the content is communicated to potential buyers who might submit an offer. There is also no requirement for advance notice as the seller is under no obligation to provide instructions prior to receiving offers. As I mentioned, the seller could change their mind at any point.
Content of offers (buyer’s rep)
For these reasons, a registrant representing a buyer client should advise their client that a seller may or may not decide to share the substance of offers submitted before their client makes an offer.
They should also advise their client that a seller is free to decide to share or not share at any point in the process.
If a buyer client doesn’t want to participate in a process where the content of offers might be shared, the registrant might recommend including a clause in the offer addressing this.
Registrants are still required to communicate the number of competing offers to every person making one of the competing offers.”
Actual TRESA Provisions
“Competing offers
22.7. (1) If a brokerage that has a seller as a client receives a competing written offer, the brokerage shall,
(a) communicate the number of competing written offers to every person who is making one of the offers; and
(b) if the seller directs, share the substance of the competing written offers with every person who is making one of the offers.
(2) For the purposes of clause (1) (b), a seller may direct that only parts of the competing written offers be shared.
(3) Information shared under clause (1) (b) must not include any personal information of the person making the offer or any other information that would identify the person making the offer.
Same, disclosure by registrar
22.8 (1) The following circumstance is prescribed for the purposes of subsection 35.1 (5.1) of the Act:
1. The seller has made a direction under clause 22.7 (1) (b) in respect of the written offer.
(2) For greater certainty,
(a) if the seller has made a direction under clause 22.7 (1) (b) in respect of parts of the written offers, the registrar shall not disclose the substance of any other part of the offers under subsection 35.1 (5.1) of the Act; and
(b) the circumstance in subsection (1) does not authorize the registrar to disclose the identity of the person making the offer under subsection 35.1 (5.1) of the Act.”
COMMENTS
The Act
So, if you are the Seller your choice is to:
- Disclose or not disclose,
- All or part(s) of the Offers.
The disclosure is only to persons making one of the Offers. No person information or anything which may identify a person making one of the Offers shal be disclosed.
A registrant is to act upon the Seller’s direction.
RECO’s interpretation and Recommendations
Acting for the Seller
Registrants representing a seller client should advise the seller about the
- benefits,
- risks, and
- impact of changing their minds.
Also, there are:
- no rules regarding how or when a seller’s decision to share the content is communicated
- no requirement for advance notice as the seller is under
- no obligation to provide instructions prior to receiving offers.
- No rules preventing a seller from change their mind
Acting for the Buyer
Registrants representing a buyer client should advise their client that a seller:
- may or may not decide to share the substance of offers submitted before their client makes an offer. and
- is free to decide to share or not share at any point in the process.
If a buyer client doesn’t want to participate in a process where the content of offers might be shared, the registrant might recommend including a clause in the offer addressing this.
Brian Madigan LL.B., Broker
Comments 12
two points: Can a seller direct that different parts of different offers be disclosed?
If the buyer adds a clause I dont believe it will do anything because its not an accepted offer.
Author
1) While it would seem to be unfair, there is nothing in the legislation itself which would prevent that.
2) A clause in an Offer which has not been accepted by a Seller is not enforceable.
Off topic, but related to #2 (clause in an unaccepted offer is not enforceable):
What about a case where the buyer adds a clause stating that their offer will be withdrawn if another offer is subsequently (and unexpectedly) submitted?
Author
That Offer could not be accepted.
However, in the screening process witb respect to number of Offers and the disclosure of certain contents, that provision doesn’t come into play.
“(b) if the seller directs, share the substance of the competing written offers with every person who is making one of the offers.”
Assuming the direction is thusly, you can’t just go back to the top X people saying the “highest amount received is $$$”, you would have to notify EVERY person who has submitted a written offer. Interesting.
Author
That’s correct
It was written by a committee that forgot the original objective – but agreed upon this compromise
Author
Committees are always troublesome.
Four offers submitted, I am representing the seller.
Offer A $500,000 3 days on financing
Offer B $480,000 firm
Offer C $460,000 2 days home inspection
Offer D $400,000 conditional on SPP
Can seller give direction to tell:
agent A that we have a firm offer.
Agent B that we have an offer for $500,000
Agent C that we have a firm offer and an offer for $500,000
Agent D – nothing conveyed
Or does the information have to be the same to all four agents?
Author
This is a very excellent question. The legislation doesn’t address that issue. We are still awaiting RECO’s guidance (interpretation) however that could still be months.
The law would seem to allow it. Ethics would seem to suggest, “all information to everyone”. Ethics is always in advance of the law, so it could in fact be years before the law catches up.
If one of the buyers refused to allow seller to share his/her offer content without revoking his/her own offer, is the seller obligated to share other offers’ contents to this particular buyer?
Author
YES