Realtors who have waited months for commission payments from the collapsed brokerage iPro Realty Ltd. are reluctant to sign paperwork issued by the insurance provider for the Real Estate Council of Ontario (RECO), worried it contains clauses that may cost them full repayment later.
Nayaki Penumarthy, one of 2,400 former iPro realtors, said that “most of us are sticking to our guns” and not going to sign right now.
“The first part says it’s a full and final release, which I do not agree to accept,” she said. “They keep saying it’s a standard clause, but this is not a standard situation.”
Last week, Jean Lépine, the newly appointed administrator of RECO, issued a statement that the insurance provider would be accelerating its schedule to begin offering as much as 50-per-cent repayment of insured commission claims within days instead of the months that had been previously announced.
Ms. Penumarthy is one of the many realtors who have pushed for quicker repayment of income that was trapped when the bank accounts of the disgraced brokerage were frozen by RECO in August. The move came 11 days after it announced that $10.5-million had been missing from iPro’s trust accounts since late May.
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Most of the deals Ms. Penumarthy is owed money for took place weeks after RECO knew of breaches of the iPro trust fund and weeks before anyone told either realtors or consumers of the problem.
She said she was encouraged when Premier Doug Ford pledged on Dec. 1: “We’re going to cover each and every single agent that’s owed every single penny,” referring to realtor commissions related to the iPro mess in a speech at a real estate conference.
Insurance provider Alternative Risk Services said signing the documents won’t preclude realtors from future repayment: “Signing this release does not prevent claimants from accessing additional funds should they become available in future. It is a release of future claims under the insurance policy, and not a release from any future funds that may become available,” it said in a statement on Dec. 17.
However, according to lawyer Alan Silverstein, who was a founding board member of RECO and helped set up its insurance program, the agreements, from a legal perspective, don’t offer the prospect of any more money.
“It doesn’t say ‘if any additional money is available, we’re going to send it to you,’” he said. The crucial clause in the document states the agreement is “a full and final compromise in settlement of all claims that were or could have been brought for coverage under the policy.”
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Mr. Lépine has moved fast to take control of RECO, removing the board of directors on his first day. On Dec. 18, he announced he would be assuming the role of chief executive officer with the departure at the end of the month of CEO Brenda Buchanan, whose interim appointment was made permanent in July after serving as chief operating officer at RECO for the previous six years.
Ms. Penumarthy said she has close to $170,000 worth of commission income pending, but she is not comfortable with the insurance form’s implication that she’s signing away her future rights to what she’s owed in order to get 50 per cent now.
In response to questions about the paperwork, a RECO spokesperson said that the insurance provider has described it as a “standard agreement,” which has been used in past situations where there has been a partial payout.
Mr. Silverstein said that if he was advising clients on whether to sign, he’d insist on including a clause that points to a pledge from another party – perhaps RECO, perhaps the provincial government – to make good on any money still owing. “The insurance company will say ‘We have done our job. We want this to wipe our hands clean,’” he said.
Alternative Risk Services has said in statements that the total claims related to iPro will top $30-million, making it the largest insurance event in the RECO program’s history. It’s also said that more than 1,000 of the 2,500 claims for commissions have been processed.
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A confidentiality clause in the release paperwork is also creating concern and confusion among those hoping to get their money back.
The non-disclosure clause reads that the terms of the release “will be held in confidence” with “no publication either oral or in writing.”
Mr. Silverstein said such clauses are standard in insurance releases. But realtors who have used public and private pressure campaigns to push the Ontario government to do more on this issue say it’s inappropriate to muzzle them now.
“They should remove any discussion regarding non-disclosure. It is actually wrong to have that clause,” said Carolyn Curren, a former iPro realtor who has organized protests and group chats of affected realtors. She warns that not being able to talk about their insurance settlements could put realtors in a vulnerable position when trying to advocate for themselves.
“It’s terrible that they would send a 50-per-cent offer and have that wording,” she said. “People who are desperate – where there’s no money on the table – they are going to sign this thing.”