Regulator finds 'significant shortfall' in accounts at Toronto-based brokerage
The Real Estate Council of Ontario (RECO) froze the trust and operating accounts of Scarborough brokerage HomeLife Today Realty Ltd. after uncovering what it described as a “significant shortfall” of in its real estate trust fund account.
The action landed as RECO itself faces intensified oversight following the iPro Realty Ltd. scandal, where an audit by Dentons Canada LLP found that the regulator’s former registrar “deviated from RECO’s typical approach when dealing with situations involving misappropriation of trust funds.”
Ontario’s government moved to install administrator Jean Lépine to restore confidence in the regulator in the wake of that case.
RECO said it first “identified a potential shortfall” during a planned pre‑inspection at HomeLife on November 28 and, during an onsite inspection on December 2, “confirmed a significant shortfall, totaling approximately $580,000, in the Real Estate Trust Account that the brokerage has been unable to correct.”
Freeze order and ongoing trades
On December 4, RECO issued a freeze order covering the bank accounts of HomeLife Today Realty Ltd., a brokerage with 18 agents based at 11 Progress Avenue in Toronto, and received confirmation on December 10 that “all the accounts were frozen.”
RECO said that “by issuing this freeze order, RECO has taken steps to protect the funds in the brokerage’s bank accounts” and that such orders were used “to prevent funds from being withdrawn…to protect consumer deposits.”
Despite the order, “the brokerage remains open, and the broker of record will ensure the orderly closure of transactions,” RECO said.
Representation agreements and Agreements of Purchase and Sale remains valid, although consumers are urged to seek legal advice if concerned about upcoming closings.
Insurance claims for deposits and commissions
RECO directed buyers and sellers with deposits held at HomeLife Today to file consumer deposit insurance claims under its professional indemnity program.
Consumer deposit coverage is described as “cost-free to consumers,” with payment “subject to the terms of the insurance policy.”
Agents owed commissions were told to submit claims under the commission protection insurance program, where the maximum an individual broker or salesperson could claim was $200,000 and aggregate coverage for one occurrence was $4 million.
Those limits reflect standard program terms but should be confirmed directly with the insurer before planning around them.
A regulator under pressure
The HomeLife action followed the iPro Realty case, where roughly $10 million was found missing from trust accounts, the largest shortfall in RECO’s history.
In that file, RECO allowed iPro to operate for several months after disclosure before the brokerage closed and its accounts were frozen.
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