Ontario real estate brokers and agents will soon be allowed to incorporate professionally in Ontario.
On March 4, 2020, Bill 145 (An Act to amend the Real Estate and Business Brokers Act, 2002) received royal assent. Among other things, the Bill creates a new exemption in respect of Personal Real Estate Corporations (“PRECs”) and prescribed members of such a corporation. The exemption will be subject to conditions prescribed by new regulations, which are not expected for several months at least.
Until then, real estate professionals will need to wait before operating through a PREC.
As with other professionals who are allowed to incorporate professionally in Ontario (including doctors, dentists, lawyers, accountants, engineers and architects), we would expect new regulations to set out the following conditions for PRECs:
- that voting shares to be owned by one or more licenced real estate brokers or agents;
- that the PREC only carry on the business of real estate trading and other ancillary activities, including the investment of surplus funds;
- that the name of the PREC include the words “Personal Real Estate Corporation” or “société personnelle immobilière”; and
- that the professional liability of the real estate broker/agent shareholders not be limited by virtue of operating through a PREC.
We would also expect regulations to set out whether or not family members of real estate brokers and agents will be allowed to own (non-voting) shares of a PREC (for some Ontario professionals, this is allowed, while for others, it is not).
PRECs are not a foreign concept in Canada. British Columbia was the first province to allow PRECs in 2008, followed by Alberta, Saskatchewan, Manitoba, Quebec and Nova Scotia and – soon – Ontario.
If you require any support in this matter, please do not hesitate to reach out to myself or anyone on our Business Law team.