In a significant development for those impacted by the collapse of iPro Realty Ltd., the Real Estate Council of Ontario’s (RECO) new administrator has announced that realtors who have been owed commission payments for months will start receiving up to 50% on eligible insurance claims this week. The move is expected to unlock millions of dollars in commission payments, and comes in response to a crisis that has been described as the largest in the 25-year history of the insurance program, with insurance costs potentially exceeding $30 million.
Relief for Realtors
Realtors, who have been anxiously awaiting their commissions, have greeted the news with relief. One such realtor is Andrea Beitel, previously associated with iPro and currently with Re/Max Professionals Inc. Beitel, who is owed nearly $100,000 in unpaid commission, expressed her joy at the news, emphasizing the timely nature of the payments, especially ahead of the tax season.
RECO’s Pledge
The commencement of payments is a significant step by the new RECO administrator, Jean Lépine, in fulfilling a promise made by Premier Doug Ford to cover the commissions. This pledge was highlighted by Ford at the Ontario Real Estate Association’s annual conference on December 1, the same day Lépine assumed control of RECO following the dismissal of its board of directors. Ford stated that all realtors affected by iPro’s collapse would receive their owed commissions in full.
Addressing Past Criticisms
RECO has faced considerable criticism for its handling of the iPro situation, particularly its delayed response in freezing the bank accounts of one of Ontario’s largest real estate brokerages. After iPro’s former owners reported on May 19 that $10.5 million in consumer deposits and realtor commissions were missing from its trust accounts, RECO did not immediately freeze the accounts. Instead, they allowed hundreds of transactions to continue to process through iPro until the mismanagement of trust account funds was made public on August 14.
Impact on Realtors
Realtors like Beitel have spoken out about how the delay in notification affected them. Beitel negotiated a home purchase with a buyer client in early June. The transaction closed six weeks later in July, and her $40,000 commission was scheduled to be sent on August 25, the same day RECO finally froze iPro’s accounts. Had she been aware of iPro’s issues in May, she would have left the brokerage immediately, taking her client with her, and thus avoiding an additional three-month wait for half the commission she’s owed.
Claims and Payouts
AR Services, the insurer, has confirmed that over $5 million in claims related to consumer deposits for home-purchase transactions have already been paid out. The insurer has received over 2,500 iPro-related claims, and while only about 1,000 of those claims have been assessed, it projects that there currently isn’t enough money under the program to fully reimburse affected realtors. The maximum insurance coverage for each claimant will be limited to $200,000, while every claim will also come with a $250 deductible.
