Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

June 6th - 2003

Protecting your commission

How can you help protect your commissions? Through RECO's Insurance Program.

How can you help protect your commissions? Through RECO's Insurance Program.

RECO requires all of its members to be insured under its insurance program. The program protects both consumers and registrants and includes a Commission Protection policy, designed to compensate a salesperson or broker for lost commission.

For example, RECO's insurance program would help registrants if a listing broker were to misappropriate funds or declare bankruptcy, resulting in commissions not being paid to co-operating brokers and listing salespersons.

RECO's insurance company would pay commissions to the co-operating broker; the co-operating salespersons/associate brokers; and the listing salespersons/associate brokers.

However, in order for a listing salesperson/associate broker to be covered by the policy, his or her principal broker would have had to previously establish and maintain an “internal” (broker-to-salesperson/associate broker) commission trust account. This is different than the “external” (broker-to-broker) commission trust arrangement that is required by the MLS rules of most Ontario real estate boards, and the statutory trust account required under the Real Estate and Business Brokers Act (REBBA), for the protection of consumers.

That requirement is reinforced in the application form for RECO's insurance program which clearly asks for confirmation from salespersons that they have determined the existence of the appropriate commission trust account.

“The salesperson/broker hereby confirms that the Principal Broker has advised that the Principal Broker has established and will maintain a commission trust account as defined herein.”

The application form also states that:

“The Principal Broker agrees that all deposits and other monies received by or due to the Principal Broker directed to satisfy commission payable to the salesperson/broker by the Principal Broker shall be received and held in trust in the commission trust account. The beneficiaries of the trust shall be the salesperson/broker and/or the co-operating broker to the extent of any agreed commission amount.”

To assist members in understanding the policy, Pro-Form Insurance Services, the broker for RECO's Insurance Program, issued a memo that outlines the different types of commission trust arrangements, and suggests possible courses of action a salesperson could take to determine whether his or her principal broker has established the commission trust account that is required in order for the salesperson to be covered under the Commission Protection Insurance Policy.

For more information about the RECO Commission Protection insurance program and to download a copy of the Pro-Form Insurance Services memo, visit RECO's web site at www.reco.on.ca/insure_comm_trst_accounts.htm

It’s important to understand the different types of commission trust arrangements.

If your board requires commission trust in its MLS rules, the principal broker needs to have the “broker-to-broker” account in place. However, it is absolutely vital, in order for salespersons/associate brokers to be covered under the RECO Commission Protection Insurance Policy that that commission trust account is extended to include “internal” (“broker to salesperson”) commission protection.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

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