Realtors impacted by the iPro Realty scandal can start to see commission protection claim payments as early as Wednesday, according to the Real Estate Council of Ontario (RECO).
On Monday, Jean Lépine, RECO’s recently appointed administrator, announced the insurance program manager has accelerated the pay out of eligible commission protection claims, at a pro-rated amount of 50 per cent, with the help of the professional liability insurance program.
According to Alternative Risk (AR) Services, the insurance program manager handling the commission and deposit claims for clients and realtors affected by iPro Realty’s alleged mismanagement of funds, the adjustor is expected to start contacting claimants on Wednesday to obtain the necessary documentation to complete these payments.
The program manager adds these claims will be processed “as quickly as possible.”
The beleaguered brokerage had 17 branches across Ontario, including two in Mississauga and three in Toronto, and employed roughly 2,400 agents.
“RECO’s priority has been able to facilitate the acceleration of commission protection payments in accordance with the policy,” Lépine said in a news release, adding he has seen the insurance program manager’s commitment to address the problem at hand since he took over RECO as of Dec. 1.
Back in May, RECO found iPro Realty’s co-founders allegedly misused about $8 million from trust accounts that were meant to be used for down payments and realtor commissions, instead of setting aside those funds for operating expenses and payments to investors.
The regulator, however, did not move to shutter the firm and freeze its assets for months, not doing so until Aug. 25.
As soon as RECO froze the accounts, nobody could access those funds without a court order, which requires evidence of loss.
No consumer was negatively impacted by iPro Realty’s failings, Lépine added on Monday, noting around $5 million consumer deposit claims have already been paid out.
The real estate regulator subsequently brought in Dentons Canada LLP to conduct an independent audit into the matter.
That audit found the former registrar of RECO “deviated from (its) typical approach when dealing with situations involving misappropriation of trust funds.”
The audit also determined the board was not notified of iPro’s issues until Aug. 10, two days after an agreement with its principals was reached.
Minister of Public and Business Service Delivery and Procurement Stephen Crawford commented on the audit, saying this has identified “significant issues” with RECO’s practices, processes and procedures.
AR Services said they have received more than 2,500 claim forms and have fully assessed more than 1,000 of them at this point. They add that these claims represent more than 1,000 claimants.
“Based on the claims received to date, we can now project the total losses submitted as claims to be approximately $30 million,” the company said online.
‘A long way towards building back their businesses and livelihoods’
The Ontario Real Estate Association is applauding Lépine’s announcement, calling it a “great step” for the provincial regulator.
“OREA commends RECO’s work to facilitate the acceleration of commission protection payments to support our fellow real estate professionals, which will go a long way towards building back their businesses and livelihoods,” Cathy Polan, OREA’s President, said in a news release.
“With this effort to support affected agents, in addition to the work that RECO and the provincial government have already done to pay out consumer deposits and make the impacted consumers whole again, it’s clear that there is real work being done to strengthen transparency and accountability at RECO.”
Claimants have up to 24 months from May 19, when RECO first learned of iPro Realty’s “significant shortfall” in its accounts, to submit a commission protection claim.
With files from CP24’s Chris Fox
