15 thoughts on “Feedback Wanted: Option to Segregate Commissions

    • I don’t really see how it could. It’s an unregulated “trust account” so it’s a trust account in name only, which makes it another bank account controlled by the broker.
      Does anything really change under this proposal other a few feel good bellyrubs?

    • Hi Sheila,
      The Consultation Paper outlines how the Alberta Real Estate Association At Risk Commission Working Group requested RECA consider the amended Rule to allow industry to come up with better solutions for the payment of commissions to associates when a brokerage ceases to operate. Providing the option to brokerages to segregate commissions in a non-RECA regulated trust account is a step in this direction. Whether or not commissions held in the other account will be payable to associates in all circumstances will likely depend on the situation. Courts may help make these decisions.

  1. So basically this amendment is proposing to keep the commission into a “Trust Account” in stead of a “General Account” within a brokerage. I don’t think it helps a lot since such “Trust Account ” is not regulated under Real Estate Act. Broker can still easily access into this account and play with commission funds.

  2. I am not understanding how this is any protection for commissions…if the owner is cleaning out the general account…could they not also do the same here? I think it is a wonderful idea if it had controls and regulations in place that would actually protect us. Why can this not be set up with the same protection as trust accounts for the public?

    • Hi Annette,
      To generally answer your question: what’s stopping someone from clearing out this “other” account would be any terms of trust they set up when they created the account (if they decided to set it up as a trust account). This would be different in every case, and the courts would help decide what recourse brokerage professionals may have in such a case.

      In these proposed amendments, RECA will not regulate these “other” accounts.

      Providing for this option for brokerages to segregate commissions into this “other” account is a step to potentially finding a better solution for protecting commissions. The Alberta Real Estate Association At Risk Commission Working Group requested RECA consider this amended Rule.

      RECA must also consider the integrity of the Real Estate Assurance Fund, which protects consumer funds held in trust by a brokerage. RECA is required by provincial legislation (the Real Estate Act) to administer this Fund.

      Please review the consultation paper and submit your feedback on these proposed amendments to consultation@reca.ca, and Council will take your comments into consideration. We want to hear from you.

  3. Until the rules change to where ALL COMMISSIONS MUST be placed into a Brokerage Trust Account[s], governed by succinct operational procedures and regulated/audited on an annual basis, protection of commissions remains in a state of “discussion”, something that has been on-going for the past two years. I would like to think that submission of annual accountant/auditor reports to RECA on Brokerage Trust account[s] not only protects consumers but those that work for consumers – us realtors. This is not possible at present given commissions can be diverted to “where ever” and used “however” and the noted recommendation would not eliminate these type of manoeuvres.

  4. Perhaps I’m wrong here but isn’t the reason that RECA won’t regulate an “other account” at a brokerage, is because RECA does not represent real estate professionals, it regulates them. Only an account that has a “public” component will be regulated. The monitoring of such an account lies outside RECA’s mandate. Am I wrong?

    • Darrell I think you have hit the nail on the head! If our commissions were protected and RECA oversaw this
      it would be protecting the public as well..I have seen some hungry agents step over the line and this could very well happen if one lost a large sum of monies…so in a backward kind of way this would be protecting the public..

  5. We as realtors pick the brokerages we work for. Maybe we should be a little more careful who we go to work for. We shouldn’t expect reca to protect us from our own decisions and reca is there to protect the public,not the realtors.

  6. My question is if the RECA protects the consumer and deposits must be held in trust, is not commission payable from the consumers deposit and proceeds of the and these funds are protected under “trust accounts”, ? So, if the above is true, how does setting up an ” other account” be any different than the brokerage having a “General Account” , in the way the brokerages do business. So if, today we need instructions from clients and Lawyers to release commission to brokerages, as these funds are paid in trust, then there is some protection for the agent, however weak, with the new change, there will be no “rules regulating disbursements” so then a brokerage setting up an “other” account can spend the money, as they see fit, so does not protect the agent at all, if the brokerage closed their doors. Leaving the agent with the only recourse to file a lawsuit against the brokerage for breach of contract and loss of commissions. it will be up to the courts to rule if the agent will be entitled to be paid. Does this make sense to anyone?

    • Thank you for the feedback, Suzanne. Brokerages are not permitted to pay commissions owed to its associates directly from the brokerage trust account, as per Section 96 of the Real Estate Act Rules. Deposits are made out to the brokerage in trust, not to the associate who may be working with directly with the client. After any commission is shared with another brokerage, other commissions must first be transferred to another brokerage account (general account), as per section 96 of the Real Estate Act Rules, from which the brokerage can then pay its employee (the associate) according to the terms of their employment contract.

      The proposed amendments will allow the creation of this ‘other’ account, and allow it to be a non-RECA regulated trust account, set up under whatever terms of trust a brokerage sets out with their financial institution when they create the account. Brokerages can use the fact they have a commissions “trust” account to attract associates for which commission protection is an important factor in their choice of brokerage.

      Again, thank you for your feedback. These amendments were proposed by Alberta Real Estate Association At-Risk Commissions Working Group, and are a small step towards better protections for industry professional commissions. We will include your response in our consultation feedback.

  7. All because a brokerage has a separate trust account for commissions does not give you as an associate any protection whatsoever..it may sound good and make you feel good ..yet believe me you are not protected!

  8. It doesn’t seem like there is much effectual change from all of the changes- which leaves to question, is it worth making the changes if it can’t adequately accomplish what it is intended to?

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