Supreme Court of Canada Grants Access to “Sold Information”
The Toronto Real Estate Board (TREB) has been engaged in an ongoing dispute with the Competition Bureau since 2011 over “sold information”.
TREB argued that it was about “privacy, confidentiality and proprietary information”.
The Competition Bureau argued that it was about “competition”.
The Supreme Court of Canada ruled in favour of the Competition Bureau by upholding a 2016 decision of the Competition Tribunal.
The difficulty with the privacy argument was that it was not a very well-kept secret. Everybody who wanted to know seemed to be able to get hold of the information. The 52,000 members of TREB had access, as did their clients who asked for the information.
Some members of TREB decided to publish the information on their websites. That made the information easily available to the public without the necessity of having to speak directly with a real estate agent. TREB took exception to this.
TREB claimed that the information was proprietary and private. Only the parties to the deal should really have that information. The information should remain confidential.
Listing Price Determination
Let’s assume that Sam wants to sell his house. The first information which he would like to have is the sold price for Bill’s house and Harry’s house down the street. They are very similar, sold within the last year and that will provide him with a guideline.
Sam could ask his friend, Frank who is a REALTOR® for the information. Easily, that information would be provided. If Sam wanted to be doubly sure he could invite several real estate agents to make listing presentations to him. Again, he would have the information.
The decision of the Supreme Court of Canada simply means that Sam doesn’t have to contact either Frank or anyone else to get the information. He can simply go “online” and search for it.
Soon, Sam will find that the information is available through a website of ABC Real Estate Brokerage. Sam won’t have to sign in or provide any of his contact information. He can simply access the site, search for the information and then leave without ever having spoken with or been contacted by a REALTOR®.
Sam Decides to an MLS Listing
Let’s assume that Sam decides to go ahead and list with a REALTOR® using the MLS system. That means maximum exposure and that his listing will appear as well on numerous websites.
Once he has “sold”, his agent must give the sold information to MLS for their records and statistics. That was one of the fundamental items that was agreed to when Sam elected the MLS route. The “sold price” would eventually become public.
Sam’s House Sells
Sam sells his house for $1.2 million. This information has to be disclosed. It was part of the MLS deal.
The answer right now, is “when the deal becomes “unconditional”. So, if there are conditions on financing and home inspection that will take 10 days, then we wait 10 days. The reason for this is simple. If the sale falls through, Sam wants to go back on the market unimpeded by the first sale price. That’s fair enough!
Accordingly, we might have a slight delay of 10 days. Right now, that information is indeed private and confidential between the parties and their real estate agents. TREB and its 52,000 members do not have access to that information. There is no one out there who can tell this secret.
Sam’s House Closes
Residential real estate deals usually close within 60 to 90 days. The Transfer is registered in the Local Registry Office which includes the value of the consideration set forth both on the conveyance and in the Land Transfer Tax Affidavit. It’s a public document. It can be searched in the Registry Office by any member of the public upon payment of the required nominal fee. It can also be searched through GeoWarehouse, an online website, by anyone who has an account. This would include most real estate agents and most lawyers.
So, a day after Sam’s deal closes, the $1.2 million sold price is public news!
Mary now wants to Sell her House at about the same time as Sam
At some point, Mary decided to sell her house too. The information about Bill’s price and Harry’s price is public.
She wants to know about Sam’s house. There’s a sign on the lawn marked sold and she wants to know what he got. Online, all she can find is the listing at $1.399,000. Did it go for that? Or, more? Or, less? Who knows!
On 22 August 2018, Mary would have to contact a real estate agent to find out. Effectively, that would introduce Mary and her interest in selling her house to a real estate agent.
As of 23 August 2018, Mary might be able to find this information out online herself without an agent’s involvement. At least, that’s the position of the Supreme Court of Canada.
However, in the first 10 days of conditions, the information would still be private. Mary would now have this information during the 50 to 80 days prior to closing. And, naturally, the same information would be publically available once again through other public sources following closing.
Source of the Information
The information which Mary is seeking will soon be available through the website of ABC Real Estate Brokerage. This Brokerage is “registered”, it is a member of organized real estate, a member of TREB, OREA and CREA. This IS NOT direct access by the public to proprietary information. This is information which TREB has and makes available to all 52,000 of its members. The source is from a member. There’s no proprietary breach here, or theft of information by some member of the public who has no right to it. Mary got it from ABC’s website. ABC Brokerage paid money to have access to this information. They are just sharing it “for free”.
Full Privacy is Still Available
Let’s assume for the moment that Sam feels very strongly about his privacy and the disclosure of the $1.2 million price tag. He can list exclusively and there’s no report on the sold price to TREB. He can sell privately and only the Buyer will know.
Sam can take his privacy one step further. He can require the Buyer to sign a confidentiality clause. The Transfer can show the nominal consideration of $2.00, and the Land Transfer Tax can be paid the day before closing. The Transfer will be stamped “Land Transfer Tax Paid”, so the public will never ever know the real price through public sources. There are a limited number of such transactions annually. Most buyers and sellers don’t bother.
This really means that the “privacy” argument goes out the window, since it’s still readily available (albeit with a 50 to 80 day delay).
Supreme Court of Canada Decision
The decision of the Supreme Court of Canada was simply to not consider the appeal. That leaves in force the decision of the Federal Court of Appeal which upheld the decision of the Competition Tribunal issued on 3 June 2016.
Here’s a link that that decision:
In essence, the Court determined: it’s not about privacy, confidentiality or proprietary information; it’s about competition.
Implications Going Forward
The information about the sale price of Sam’s house 10 days after it was sold was always available through a REALTOR®, and now it will be still available through a REALTOR, but the person providing the information might not ask your name.
I would think that 75% of the time, someone in Sam’s position will still list the property for sale through a REALTOR® (as always) and 25% of the time may wish to attempt to sell it privately for a few days (as always).
Fewer REALTORS® going forward will be able to use this “contact opportunity” with Mary as an opportunity to provide her with a “sales pitch”.
Some new online websites will exploit this information. They will have to register as a Brokerage in order to get the information in the first place. They will provide it, but people will still have to “sign in” or have an account. They will then sell the contact list to real estate agents who are looking for leads. Technically, these companies become real estate agents themselves for the purposes of exploiting the information and selling leads to real estate agents. Interesting! So, you can see why TREB was opposed in the first place.
Now that all this new competition falls into place, virtually all real estate brokerages will provide access to this information on their own websites. That’s in order to level the playing field.
It is rumoured that this litigation cost TREB about $2 million from start to finish (2011 to 2018). That’s $38.50 per member, over an 8 year period, which works out to $4.80 per year, or 3 small cups of coffee at Tims, annually. Obviously, to TREB, the delay in terms of implementation was well-worth the price.
Just this morning, I provided this type of information to a client at their request. I don’t think that this will change going forward. Those were just “facts”. Anyone can deliver “facts”. What the client really wanted to know was my “opinion” on the market.
Brian Madigan LL.B., Broker