The CEO of Ontario’s real estate regulator is stepping down in the wake of the iPro Realty scandal, while realtors continue to wait for missing commissions following Premier Doug Ford promise to make sure they got “every single penny.”
On Thursday, the Real Estate Council of Ontario’s CEO Brenda Buchanan “made the personal decision to step down” effective Dec. 31, according to a statement from the provincially appointed administrator.
“I want to thank Brenda for her commitment and her contributions to RECO and wish her well in the future,” said Jean Lépine in a statement on Thursday.
Buchanan, in the statement, said, “while not an easy decision, I believe it is the right time for both me and the organization to begin a new chapter.”
Buchanan’s exit follows an announcement earlier this week from the regulator’s insurer projecting a total loss of $30 million, based on the claims received to date. The insurer said it only has the means to pay out realtors 50 per cent of their owed commissions, for the time being.
Lépine was appointed by the Ford government to oversee the regulator amid widespread concerns about its ability to protect consumers from theft and fraud in the wake of the iPro scandal, which saw co-founders Rui Alves, a former RECO board member, and Fedele Colucci strike a deal with RECO to evade charges and fines after they “illegally disbursed” more than $10 million from the company’s trust accounts, which held consumer deposits.
In September, court documents revealed $30 million had been diverted from iPro accounts after looking at documents over an eight-month period but found $9.5 million shortfall in the trust accounts at the time.
Lépine formally assumed control of the organization on Dec. 1 and dismissed all eight board of directors on his first day of the job.
Since his appointment, there has been a strong push to pay impacted real estate agents, who have been demanding their owed commissions for four months.
On Dec. 17, real estate agents began to receive payouts of up to 50 per cent on eligible insurance claims just in time for Christmas, but many realtors are disappointed they won’t be reimbursed 100 per cent of their lost commissions.
“It’s just like a kick in the teeth,” said Steven Smurlick, who lost $21,500 in commissions after doing a transaction with iPro in the summer, a situation he said could have been prevented.
RECO, which was informed of the shortfall in May, allowed Alves and Colucci to continue operating their business to mid-August, transacting more than $700 million in residential real estate sales before informing the public and freezing iPro’s trust accounts, a Star investigation reported.
“It comes back to the fact that they didn’t tell anybody when they could have, right? I could have had information that this company was going under, but they didn’t do that, they deceived us,” Smurlick said. “They weren’t honest with the public, and not honest with agents, letting business go on as if nothing happened. That’s the part that’s kind of inexcusable.”
RECO’s insurer, Alternative Risk Services, said it has received more than 2,500 claims but only around 1,000 of them have been assessed so far. Based on the claims received, the insurer projects a total loss of around $30 million. Around $5 million in consumer deposit claims have already been paid out.
“This event is larger in scope and size than any that has occurred in 25 years of the insurance program,” AR Services said in an information notice on Monday, adding that there currently isn’t enough money under the program to fully pay back affected realtors.
“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,” at this time, the notice said, adding that accessing money from the frozen accounts requires court approval.
MPP Tom Rakocevic, the NDP critic for public and business service delivery and procurement, said in a statement on Thursday, that, “despite the government’s promise that realtors be paid every cent, they are currently set to recover only half of their earned commissions. I have met with affected realtors who are facing severe financial strain through no fault of their own. They should not bear the cost of systemic oversight failures.”
The projected losses of $30 million is also “much worse” than initially expected, Rakocevic said.
On Dec. 1, Ford said at a real estate industry conference that his government would work to ensure realtors are paid all of the owed commissions.
“We’re gonna cover each and every single agent that’s owed every single penny,” he said.
On Thursday, the premier’s office told the Star they are looking at options to “fully remedy the situation.”
Brian Skrba, a former iPro agent who has worked in the industry for more than 15 years, said he’s spoken with the premier a couple of times after reaching out directly, outlining the financial strain he and other agents are under (he would not disclose to the Star how much commission he’s owed).
Skrba said that Ford told him, ” ‘whatever’s not making you whole, the province of Ontario will cover it.’ You know, he said that to me twice.” He added that Stephan Crawford, whose ministry oversees RECO, also told him the remaining amount of commission owed will be dealt with in the middle of January.
For now, Skrba is putting his trust in the government to deliver on its promise.
Nazie Moseni is owed $150,000 in commissions on real-estate deals involving iPro and had six transactions from May to August before the brokerage shut down.
She’s frustrated with how the insurance company and RECO have handled the situation so far, and doesn’t understand how the total claims can come to $30 million when the shortfall in iPro’s trust accounts was initially $10 million.
Moseni, and other realtors, want a clear breakdown of the claims made, as they believe many to be based on deals that haven’t closed yet. Realtors whose deals have closed should be serviced first, she said, as that money would already be in the bank accounts.
The Star reached out to RECO to explain the discrepancy between the $30 million projected losses and $10 million. A RECO spokesperson was not able to provide clarification.
“Agents deserve to be told the truth. They need transparency,” Moseni said.
