The Real Estate Council of Ontario (RECO) is immediately suspending and freezing the accounts of four Save Max-associated brokerages after finding $2.7 million unlawfully disbursed from trust accounts, the regulator said in a release Tuesday.
It also issued notices of proposals to revoke registrations for the Mississauga brokerages and two brokers of record.
The money was “typically replaced before month-end, when brokerages are required to complete a reconciliation of the Real Estate Trust Account,” however RECO noted the disbursements are “clear and repeated breaches” of the Trust in Real Estate Services Act, 2002.
“The unlawfully disbursed funds were used outside of the terms of the trust, including for loan payments, property management fees, taxes, credit card balances and vendor services,” RECO said.
The violation represents the largest trust account breach since the iPro Realty scandal, which saw $10.5 million missing and is the largest trust breach in RECO’s history.
It’s also the third case of trust mismanagement in the last year, with RECO suspending HomeLife Today Realty Ltd. brokerage and associated individuals in December.
Trust account requirements are meant to protect consumers and ensure real estate transactions close, the regulator said Tuesday, and any deviation represent a “serious contravention” of regulations.
“These funds must be held in trust strictly for their designated purposes: to secure deposits, facilitate the completion of transactions, and be disbursed in accordance with the terms of the trust. They are not to be used for operating expenses, cash flow support, investments, or any other purpose outside what the law expressly permits,” it said.
The suspended and frozen brokerages — all located at 1550 Enterprise Rd. in Mississauga — are Save Max Real Estate Inc., Save Max First Choice Real Estate Inc., Save Max Supreme Real Estate Inc. and Save Max Ace Real Estate.
Save Max Real Estate Inc.‘s broker of record and sole director Raman Dua as well as Save Max First Choice Real Estate Inc.‘s broker of record Nidhi Dua received notices of proposals to revoke their registration and immediate suspension orders.
A statement released Tuesday by Save Max Real Estate Inc. and Raman Dua said the brokerages “are cooperating fully and proactively addressing each matter raised.”
All client trust accounts “remain fully intact and secure,” the release added, and while there is a freeze on transactions across the brokerages, they are “working urgently to resolve these matters.”
The statement also addressed past and current clients, promising to keep them informed of developments, and assured their realtors they are “fighting to protect” their careers.
With files from Clarrie Feinstein
