RECO guarantees 100% payment of eligible iPro commission claims

Real Estate Council of Ontario (RECO) says agents caught in the collapse of iPro Realty Ltd. will receive 100 per cent of their eligible unpaid commissions.

The regulator released the news on Wednesday, after initial 50-per-cent pro-rated payments began flowing to claimants over the last month.

Funds from RECO’s insurance program stability fund are being placed in a protected trust to address the shortfall that resulted from the misappropriation of trust funds by iPro’s principals.

“RECO is enabling the full payment of all eligible commission protection claims,” administrator and acting CEO Jean Lépine said in a statement, adding the move is intended to limit financial harm to registrants while recovery efforts move through the courts.

The iPro collapse left hundreds of agents without commissions for deals that had already closed, triggering claims under the industry’s mandatory commission protection insurance program.

Based on the claims received by mid-December, the projected total losses amount to approximately $30 million, according to the insurance program manager.

As of RECO’s last update on Jan. 6, it was working to process 2,650 claim forms.

Recovery efforts

RECO and the insurer have been pursuing several recovery avenues, including civil court proceedings and applications to access frozen iPro trust accounts. A court recently approved the release of some funds to be used for commission payments, which RECO described as a significant step forward. Additional applications are expected.

Ontario’s Minister of Public and Business Service Delivery and Procurement, Stephen Crawford, said the province directed RECO to take action to ensure registrants were not left absorbing the losses.

“By ensuring every eligible commission protection claim is paid in full in accordance with the insurance program, we are putting registrants first,” Crawford said.

Additional payments could start as soon as next week

As with the initial round of payments, claimants must complete and return release documents before funds can be issued. The timing of individual payments will depend on how quickly those forms are submitted and processed.

RECO said additional payments could begin flowing as early as next week, as claims are finalized.

The insurer continues to assess and verify claims, which RECO said is being done to ensure payments are accurate and legitimate.

Civil proceedings aimed at recovering funds from iPro’s former operators will continue alongside the payment process, RECO said.

Agent welcomes the news

Maria Florez, who helped organize protests in Queen’s Park to bring attention to the issue, said a huge weight has been lifted. The agent had lost a commission of $50,000 after representing a buyer who bought a house from an iPro agent.

“We believe this is a pivotal moment where we can rebuild consumer confidence in Ontario’s real estate system,” she said.

Keep it up, says Polan

The Ontario Real Estate Association (OREA) said in a statement it was “thrilled” to see the news.

OREA president Cathy Polan said that there is still work to be done.

“RECO needs to keep up this momentum and get back to the basics of fulfilling their consumer protection mandate. This is the time to work with the real estate sector, government and consumers to drive even more change, particularly with the next phase of regulations coming to the Trust in Real Estate Services Act (TRESA),” she said. “Today’s news is a clear message that there is real work being done to transform RECO. OREA stands ready to be part of the solution to restore trust in the regulator and ensure that something like this does not happen again.”

Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has over a decade of experience covering daily business news.