Alternative Risk Services, the insurance company managing the claims process for realtors, warned last week that there was not going to be enough money to pay back all affected realtors.Evan Buhler/The Canadian Press
The first test of the Real Estate Council of Ontario’s new administrator may be figuring out how to pay for promises made by Premier Doug Ford.
Mr. Ford gave a speech on Monday at the Ontario Real Estate Association’s annual conference where he appeared to suggest that realtors who have commission income trapped in iPro Realty Ltd. bank accounts – frozen by court order – will be able to fully recover those funds.
“My biggest concern is get that money into their pockets. If we have to cover them, these people work their backs off. They deserve their commissions,” Mr. Ford said. “We’re going to cover each and every single agent that’s owed every single penny.”
A spokesperson for the Ministry of Public and Business Service Delivery and Procurement declined to clarify what Mr. Ford was promising, but said in a statement that the ministry is “taking action to restore public confidence” while examining “all options to remedy the situation.”
A report from law firm Dentons Canada into RECO’s handling of the iPro affair was critical of the former registrar’s decision to let the brokerage operate for months after it learned of the largest trust fund shortfall in the regulator’s history. The provincial government has cited that report as a catalyst for its loss of faith in RECO’s wider management.
Critics deride realtor ‘bodyshop’ model in wake of iPro scandal
Mr. Ford’s pledge differs from the view of Alternative Risk Services, the insurance company running the claims process for realtors who have transactions or commission income affected by the Aug. 25 court-ordered freezing of iPro’s bank accounts. That court order came 11 days after RECO revealed there was $10.5-million missing from those accounts dating back to May.
AR Services posted a public notice on Nov. 28, warning that there was not going to be enough money to pay back all affected realtors.
“What we can confirm at this stage of the program’s investigation is that the commission amounts being claimed by iPro agents and cooperating brokerages appear to exceed the funds we understand may be available in those accounts. Even with the Program’s $4-million in available insurance limits, there is a shortfall,” it read.
AR’s updates have also warned realtors it could take six to nine months for payments to start flowing, of which more than 1,500 have been received just since October.
“We’re after 100 per cent commission repayment,” said realtor Carolyn Curren, who has been organizing those affected by iPro’s collapse.
People in her group are missing between $10,000 to $100,000 in commissions that have been in limbo for months. On Friday, the group held a protest at Queen’s Park. Ms. Curren said its members had been in contact by phone with Mr. Ford and attended fundraising events with Stephen Crawford, the Minister of Public and Business Service Delivery and Procurement, who oversees RECO.
Ontario brokerage collapse raises questions about oversight
“I do believe he’s sincere, he’s said he’s going to help us,” Ms. Curren said of Mr. Ford.
On Monday, Jean Lépine, who was chosen by Mr. Crawford as the administrator for RECO, took control of the body and dismissed its board of directors. Mr. Lépine posted a message on RECO’s site, promising to keep realtors and the public informed.
In a statement Tuesday, a spokesperson for RECO said the regulator is “aware of the need for swift resolution on commission protection insurance claims and is prioritizing this matter.”
Mr. Crawford on Tuesday also stopped short of promising 100-per-cent repayment.
“We just put an administrator in yesterday. So we’re going to go in there and take a look and see what we can do to the best of our ability to ensure that agents are paid as much as possible,” he said.
Regulator freezes accounts of small Oakville real estate brokerage
If the existing insurance can’t fully cover the lost commissions, industry experts say it leaves open the question of where the funds will come from to make good on Mr. Ford’s pledge.
“If somebody’s gonna backstop, is the government the backstop or is the government a temporary backstop?” said Alan Silverstein, a lawyer and one of the early board members of RECO who also had a hand in the creation of the insurance program nearly 30 years ago.
Mr. Silverstein suggests it may not necessarily be taxpayers who pay for Mr. Ford’s promise. It could be RECO or contributions from the rest of the real estate profession that help solve the iPro mess.
“He (Ford) may say, ‘We’ll pay out whatever we’re gonna pay out, but now we want to go to RECO and you guys have to compensate the government for what we did on your behalf,’” he said.