Months after the collapse of iPro Realty, impacted real estate agents are expected to see payouts of 50 per cent of their unpaid commissions, but at least one agent says it’s not enough.
Jean Lepine, who took over as administrator of the Real Estate Council of Ontario earlier this month after his appointment by the provincial government, announced Monday that the prorated payments would begin as soon as Dec. 17.
“RECO’s priority has been to facilitate the acceleration of commission protection payments in accordance with the policy,” Lepine said.
The move comes five months after RECO moved to safeguard the funds by freezing all iPro accounts on Aug. 25.
That freeze came after iPro was ordered to close on Aug. 19 by its regulator after shortfalls with its consumer deposit and commission trust accounts were uncovered, forcing 2,400 agents to seek new brokerages.
“It was always smooth sailing until it wasn’t, and the last few months of being a real grind, it has been really difficult to sort of stay on track professionally while sort of conducting this second full-time job of trying to fight for our rights and our hard-earned commissions and things like that,” said Andrea Beitel, a former iPro real estate agent who now serves west Toronto with Re/Max Professionals. “It’s sort of this emotional roller-coaster.”
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At the time, RECO said the shortfalls amounted to about $10.5 million, calling it a “serious breach” of the agency’s responsibilities under the law and to its customers and agents.
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But an audit ordered by the Ontario government found that the real estate agency had told RECO that its trust accounts had a $10-million shortfall in May, but the registrar did not freeze or monitor their accounts for nearly three months following. Dentons Canada LLP was brought in by RECO to conduct the audit.
RECO’s insurer, Alternative Risk Services, said in a statement that it projects the total losses submitted as claims to be approximately $30 million.
“This event is larger in scope and size than any that has occurred in 25 years of the insurance program,” ARS said.
In total, the company said it has received more than 2,500 claim forms and assessed more than 1,000 of them so far. But it added that as of Dec. 15, there is not enough money in the frozen iPro accounts to pay agents their full amounts owed for unpaid commissions.
“For clarity, as of today’s date, the combination of the $4 million insurance limits plus amounts expected to be available in the frozen iPro accounts are only sufficient to cover 50 per cent of the estimated total commission claim amounts,” the update says.
In total, ARS says each claimant will be limited to $200,000, in addition to a $250 deductible that will be taken out of the total claim payout.
The update from ARS also said insurance claims for consumer deposits began being paid on Aug. 29.
Beitel said she’s relieved that consumers are “being made whole quickly” as it’s the only way for trust to be brought back to the real estate profession.
But she told Global News that while she’s happy to be receiving some funds, 50 per cent is not enough when she is currently owed about $100,000 in commissions and about $25,000 in HST funds, the latter of which she feels she’ll never see.
She said one such case was for a commission from a sale that closed in July, with a $40,000 commission owed in August on the same day the iPro funds were frozen.
“So I had this paperwork that said you’ve been paid, but I had not been paid, which has been a source of some anxiety because what is this insurance company going to do when they look at this?” Beitel said.
— with files from Global News’ Aaron D’Andrea
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