Realtors impacted by the iPro Realty scandal will be able to receive 100 per cent of their eligible commission protection claims, according to the Real Estate Council of Ontario (RECO).
“RECO is enabling the full payment of all eligible commission protection claims,” Jean Lépine, RECO’s recently appointed administrator and acting CEO, said in a news release on Wednesday.
“Funds from RECO’s insurance program stability fund are being placed in a protected trust to address the shortfall that RECO believes resulted from the misappropriation of trust funds by iPro’s principals, while concerted recovery efforts continue.”
iPro Realty had 17 branches across Ontario, including two in Mississauga and three in Toronto, and employed roughly 2,400 agents.
In May of last year, RECO found the brokerage’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, no one could access those funds without a court order.
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In an update in December, Lépine said no consumer was negatively impacted by iPro Realty’s failings, and said around $5 million consumer deposit claims had already been paid out.
To make the 100 per cent claims payouts possible, RECO said it will use funds available from its insurance program stability fund to further support the insurer in processing those payments.
“While recovery through the courts will take time, RECO has determined that registrants should not bear further financial responsibility while these efforts continue,” Wednesday’s news release said. “Claimants will be required to complete and return the payment release documentation to enable the insurer to release funds.”
The council added that an initial 50 per cent pro-rated payments are already underway, and additional payments are expected to begin as early as next week.
RECO said both them and the insurer have been “pursuing multiple recovery pathways,” which include a commission protection insurance process and civil proceedings to recover trust account shortfalls that they believe resulted from the misuse of trust account funds by iPro’s principals.
“As part of these efforts, the insurer continues to seek court approval to access funds held in frozen iPro trust accounts, which can only be released pursuant to a court order,” the release said.
Toronto Regional Real Estate Board commends RECO
Reacting to the news that 100 per cent payouts will be granted, the Toronto Regional Real Estate Board (TRREB) commended both RECO and the Ontario government for “fully delivering on their commitment.”
“TRREB remains committed to collaborating with the Government of Ontario and RECO on reforms that strengthen transparency, accountability, consumer protection and public confidence in Ontario’s real estate market,” the board’s president, Daniel Steinfeld, said in a statement.
‘Thrilled to see’: Ontario Real Estate Association
The Ontario Real Estate Association (OREA) also reacted to the news Wednesday, saying they are “thrilled to see” RECO and the province offer full compensation to parties who were impacted by the scandal.
“This is a tremendous step towards helping our fellow real estate professionals build back their businesses and is the type of bold, decisive action we need to see if they are to deliver on the reforms they have committed to implementing,” OREA President Cathy Polan said in a statement.
“OREA stands ready to be part of the solution to restore trust in (RECO) and ensure that something like this does not happen again.”
With files from CTV News Toronto’s Alex Arsenych
