Brekland Realty Group Update – Aug. 2013
On July 30, 2013, BDO Canada Limited (BDO), in its court appointed role as Claims and Distribution Officer, obtained an Order from Mr. Justice Wilton‐Siegel of the Ontario Superior Court of Justice relating to the disposition of bank account funds that were subject to RECO’s Freeze Order of February 1, 2012 against Monster Realty Corporation, operating as Brekland Realty Group (Brekland).
For a copy of the July 30, 2013 Order of Mr. Justice Wilton‐Siegel , click here
This Justice’s Order gave approval on several issues that are important to real estate professionals affected by the Brekland situation:
- BDO’s proposed distribution of funds, as laid out in paragraphs 61 to 67 of BDO’s report, was approved. To see BDO’s report, click here
- The deadline for submitting claims was extended from Feb. 8, 2013 to June 17, 2013, to allow for the acceptance of several claims that were filed late.
- In cases where real estate deals involving Brekland close at some point in the future, vendors (i.e., developers and their lawyers) are now obligated to pay those future sales commissions directly to the agent/broker/salesperson when the deal closes, regardless of whether Brekland has issued any invoice or direction in respect of such commissions.
Important information about future commissions
Regarding the third bullet point above:
It is important to note that this Order is unique to the circumstances surrounding Brekland and cannot be used as a precedent for any other brokerage situation. Without this unique court‐sanctioned resolution, any payment of commission directly to a registrant would be in violation of the Real Estate and Business Brokers Act, 2002 (REBBA 2002).
- Also note that affected developers will not necessarily be aware of their court‐ordered obligation to pay commissions directly when deals involving Brekland close. Any affected registrant seeking payments directly from a developer should show them a copy of the July 30 Order of Mr. Justice Wilton‐Siegel (specifically pointing out Paragraph 7 of the Order), as well as a copy of Exhibit R of BDO’s report, click here.
- In addition, any affected registrant should seek advice from his/her tax or accounting advisor about any income tax issues or liabilities that may arise because of receiving commissions directly from developers instead of from Brekland, the employing brokerage at the time the agreement of purchase and sale was first entered into.