Brekland Realty Group – FAQs about suspensions of registration & freeze orders – Mar. 2012

Q: What is a Freeze Order?

The Director under the Real Estate and Business Brokers Act, 2002 (REBBA) may issue an order
“freezing” the assets or trust funds of any registrant or former registrant if the Director believes that
such an order is advisable for the protection of the public. The Director can only issue a freeze order if:

1. a search warrant has been issued under REBBA; or
2. criminal proceedings are about to be or have been instituted against the registrant or former
registrant; or
3. proceedings in relation to a contravention under REBBA or any other Act are about to be or have
been instituted against the registrant or former registrant.

Typically, a freeze order is issued when a shortfall is discovered in a brokerage’s bank accounts
(particularly the Real Estate Trust Account) and the brokerage is unable to correct or fund or eliminate
the shortfall. The freeze order prevents any further money being withdrawn from the brokerage’s Real
Estate Trust Account and other accounts.

The Director and/or RECO do not act as a receiver or trustee in bankruptcy. The Director and/or RECO
cannot take ownership, control or possession of the frozen bank accounts of the brokerage. The bank
accounts remain in the name of the brokerage. The Director cannot direct payments from any frozen
trust money or disburse assets.

Q: Why was the registration of Brekland Realty Group suspended?

The Registrar under REBBA has the authority to issue an immediate temporary suspension order where
he/she feels it is in the public interest to do so and where he/she has issued a proposal to suspend or
revoke the registration. During a routine inspection by RECO, a significant shortfall was discovered in the
brokerage’s trust account. Upon further investigation and careful consideration, the Registrar
determined that it was in the public interest to suspend the registration of the brokerage.

When a brokerage’s registration is suspended, the registrations of brokers and salespersons working at
that brokerage are also suspended. Brokers and salespersons, registered with a suspended brokerage,
are not permitted to trade in real estate, but may apply to transfer their registration to another
brokerage.

EMPLOYEES OF BREKLAND REALTY GROUP

Q: What happens to brokers and salespersons employed by Brekland Realty Group?

Under the REBBA, independent contractors are classified as employees. Brokers and salespersons,
employed with Brekland Realty Group, cannot trade in real estate while the brokerage’s registration is
suspended. They will need to transfer their personal registrations to another brokerage in order to
continue trading in real estate. To do this, they will need to submit the transfer form to RECO and pay
the appropriate transfer fee. The transfer form is available from RECO’s website and a copy of it was
also included with the letter notifying of the suspension of each broker’s and salesperson’s registration.

Most former registrants have already transferred to a new brokerage. In the majority of cases that
transfer was processed within 24 hours of receiving the application. RECO will continue to ensure it
assists registrants in this process as quickly as possible.

Brokers and salespersons who have questions, concerns or wish to transfer their registrations to
another brokerage should contact:

Registration Officer: Margaret Marshall
Phone: (416) 207‐4809 or 1‐800‐245‐6810 ext. 4809

Q: What do I do with my listings and Buyer Representation Agreements?

Listings and BRAs are contracts between your clients and Brekland. Even though Brekland can no longer
trade in real estate and most Brekland registrants have now moved to other brokerages, these
representation agreements are still binding contracts with Brekland. Your clients need to seek the
advice of their lawyers to assist them with terminating their contractual relationship with Brekland
before entering into an agreement with another brokerage.

Q: How do I get paid commissions owing from Brekland?

Brekland Realty Group’s brokers and salespersons, who are owed commissions from the brokerage, can
submit insurance claims under the Insurance Program. Payment of any claim is subject to the terms of
the insurance policy.

Brokers and salespersons who have questions about the commission protection coverage and the
process for making a claim should contact:

Granite Claims Solutions
Toll Free: 1‐877‐740‐1913
Toll Free Fax: 1‐866‐735‐1033
Email: claims@reco‐claims.ca

Q: How long will it take for the insurer to evaluate a commission claim?

The insurer conducts its own investigation and tries to expedite claims as quickly as possible. However,
the insurer also needs to be aware of all or most of the claims against the brokerage before it can
process claim payments. The maximum claim amount a broker or salesperson may make is
$100,000. The maximum amount of coverage for all commission protection claims relating to one
occurrence is $1,000,000. Payment of any claim is subject to the terms of the insurance policy.

Q: I collected a deposit cheque from a consumer just prior to the freeze order.

Do I deposit that cheque in the frozen trust account of Brekland Realty Group?

RECO will arrange to have the money deposited in Brekland Realty Group’s frozen account. Co‐operating
brokerages and Brekland Realty Group’s brokers and salespersons with trust deposits owed to Brekland
Realty Group should contact RECO for instructions. Please be prepared to provide the cheque, payable
to Brekland Realty Group, and the paperwork in relation to the transaction to RECO and immediately

Contact:
Jay Blair, RECO
Phone: (416) 207‐5171
Email: jay.blair@reco.on.ca

Q: I am owed a commission from a cooperating brokerage. Can I have the cheque made payable to me?

No. The commission is contractually owed to your brokerage, Brekland Realty Group, not to you
personally. Moreover REBBA prohibits the cooperating brokerage from paying commission to you.
Additionally, REBBA prohibits you from accepting commission or other remuneration for trading in real
estate from any other brokerage other than Brekland Realty Group.

RECO requests that cooperating brokerages owing commissions to Brekland Realty Group please
immediately contact RECO for instructions and be prepared to provide the cheque, payable to Brekland
Realty Group, and the paperwork in relation to the transaction to RECO. RECO will arrange to have the
money deposited in Brekland Realty Group’s frozen account:

Jay Blair, RECO
Phone: (416) 207‐5171
Email: jay.blair@reco.on.ca

Q: I picked up a commission cheque made out to Brekland Realty Group from a cooperating brokerage just prior to the freeze order. What do I do with it?

RECO will arrange to have the money deposited in Brekland Realty Group’s frozen account. Please
immediately contact RECO for instructions and be prepared to provide the cheque, payable to Brekland
Realty Group, and the paperwork in relation to the transaction to RECO:

Jay Blair, RECO
Phone: (416) 207‐5171
Email: jay.blair@reco.on.ca

Q: I am an unregistered employee of Brekland Realty Group and I am owed salary/pay.

Can RECO help me?

No. The commission protection insurance only covers commissions owed to registered brokers and
salespersons, and RECO has no authority to disburse any funds from frozen brokerage accounts to pay
you. You may wish to seek legal advice regarding options that might be available to you to recover your
lost wages.

INFORMATION FOR HOME BUYERS AND SELLERS

Q: Are listing agreements or buyer representation agreements with Brekland Realty Group still valid?

As a result of Brekland Realty Group’s registration being suspended, it can no longer trade in real estate.
Consumers should obtain legal advice on how to proceed. REBBA does not give RECO the legal authority
to unilaterally declare that Brekland Realty Group’s listing agreements and buyer representation
agreements are invalid.

Q: I sold a house through Brekland Realty Group with an upcoming closing date. Is the deal still valid?

The suspension of a brokerage’s registration does not affect the validity of the agreement of purchase
and sale between a buyer and a seller where the brokerage represented one party or both parties.
Sellers or buyers, who may be concerned about whether a pending sale or purchase will be completed
on time due to Brekland Realty Group’s suspension, should seek advice from their own lawyers. For
general inquiries about deals that are closing and how the freeze may impact them, you may contact:

Jay Blair, RECO
Phone: (416) 207‐5171
Real Estate Council of Ontario Page 4 of 5
Email: jay.blair@reco.on.ca

Q: I sold a house listed by Brekland Realty Group and my client is expecting a portion of the deposit on the closing date. Will RECO release the deposit money?

Consumers who are owed deposit money from the brokerage can submit insurance claims under the
Insurance Program that registered real estate brokers and salespersons are required to participate in.
Consumer deposit coverage is cost‐free to consumers, but payment of any claim is subject to the terms
of the insurance policy.

Consumers with questions or concerns about deposit money should contact:

Ruth Garrett, Insurance Administrator
Phone: (416) 207‐4872 or (416) 207 4841
Toll Free: 1‐800‐245‐6910
Fax: (416) 207‐9020
E‐mail: insurance@reco.on.ca

Q: How long will it take for the insurer to evaluate a consumer deposit claim?

The insurer conducts its own investigation and tries to expedite claims as quickly as possible. However,
the insurer also needs to be aware of all or most of the claims against the brokerage before it can
process claims payments. The maximum claim amount a consumer may make is $100,000. The
maximum amount of coverage for all consumer deposit claims relating to one occurrence is $1,000,000.

Payment of any claim is subject to the terms of the insurance policy.

The amount of the claim payment may depend in part on the number of claims made against the
brokerage and the total dollar value of the claims. Until the Insurer has completed its own investigation
and received all claims, the insurer may not be able to confirm the total amount of the claim payment.

If you have questions or concerns about the insurance coverage in place for consumer deposits or the
terms of the insurance policy please contact:

Granite Claims Solutions
Toll Free: 1‐877‐740‐1913
Toll Free Fax: 1‐866‐735‐1033
Email: claims@reco‐claims.ca

COOPERATING BROKERAGES

Q: We owe Brekland Realty Group commission amounts.

However, Brekland Realty Group owes us commission amounts.

Are we allowed to deduct what Brekland Realty Group owes us when we calculate our outstanding obligation to Brekland Realty Group?

No. Your brokerage must pay the full amount of outstanding commission as it normally would. RECO
will arrange to have the money deposited in Brekland Realty Group’s frozen account. Please
immediately contact RECO for instructions and be prepared to provide the cheque, payable to Brekland
Realty Group, and the paperwork in relation to the transaction to RECO:

Jay Blair, RECO
Phone: (416) 207‐5171
Email: jay.blair@reco.on.ca

Brokerages owed commissions from Brekland Realty Group may be eligible to make a claim under the
commission protection coverage. Payment of any claim is subject to the terms of the insurance policy.

For more information about making a commission claim contact:
Granite Claims Solutions
Toll Free: 1‐877‐740‐1913
Toll Free Fax: 1‐866‐735‐1033
Email: claims@reco‐claims.ca

Q: How long will it take for the insurer to evaluate a commission claim?

The insurer conducts its own investigation and tries to expedite claims as quickly as possible. However,
the insurer also needs to be aware of all or most of the claims against the brokerage before it can
process claim payments. The maximum claim amount a broker or salesperson may make is $100,000.

The maximum amount of coverage for all commission protection claims relating to one occurrence is
$1,000,000. Payment of any claim is subject to the terms of the insurance policy.

OTHER BUSINESSES, ORGANIZATIONS AND/OR INDIVIDUALS:

Please be advised that RECO does not act as a receiver or a trustee in bankruptcy. RECO cannot disburse
any funds from the frozen accounts or release any frozen assets. RECO recommends you seek legal
advice regarding potential options related to recovering amounts owed to you.

IF YOU HAVE A QUESTION OR CONCERN NOT ADDRESSED IN THIS ADVISORY, PLEASE
CONTACT:
Jay Blair, RECO
Phone: (416) 207‐5171
Email: jay.blair@reco.on.ca


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