Consumer Proposal, Bankruptcy, Realtors and RECO
We often speak with real estate agents and brokers facing financial difficulty. While eager to eliminate their debt, Realtors usually want to discuss how a consumer proposal or bankruptcy filing will affect their professional licensing after the filing.
The Real Estate Council of Ontario (RECO) regulates real estate professionals across the Province of Ontario, and enforces the Real Estate and Business Brokers Act, 2002 (REBBA). The REBBA sets forth a number of rules and regulations which govern how, and under what circumstances, a consumer proposal or bankruptcy will affect a Realtor’s license.
Based on information provided by RECO, and in our own experience, in many cases a bankruptcy or consumer proposal filing will not affect a real estate salesperson’s ability to continue their business and register or re-register as a salesperson. In this respect, a consumer proposal or bankruptcy filing can be a tremendously effective tool in eliminating debt, while allowing a salesperson to move forward in their business free from the burden of previous debt.
How can a consumer proposal or bankruptcy help a Realtor?
We know that the real estate game can be tough. A sea of agents vying for a limited number of listings can result in limited earnings but significant expenses, as agents promote and market themselves to potential clients. Consumer proposals or bankruptcies, both legal proceedings which allow people and businesses to eliminate their debt, can be especially helpful to real estate professionals. Where debts have accumulated without corresponding earnings, a filing can put the real estate professional back on a level playing field, free from previous debt. These proceedings immediately stop garnishments, remove bank freezes, eliminate interest charges and put an end to harassing phone calls.
Can a Realtor eliminate income tax debt in a consumer proposal or bankruptcy?
Absolutely. Income tax debt can be compromised and eliminated through the consumer proposal or bankruptcy process. In fact, a very large part of our practice is spent helping people eliminate their income tax, HST and employee deductions debt to the Canada Revenue Agency.
Can I apply for registration with RECO if I have declared bankruptcy or have filed a consumer proposal?
When applying for registration with RECO, all bankruptcies and consumer proposals must be disclosed. RECO advises that under normal circumstances, a bankruptcy will not prevent an individual from registering, however, RECO may request that an applicant voluntarily agree to a set of conditions regarding their registration.
Will a consumer proposal or bankruptcy affect my ability to renew my license?
Under the REBBA, Realtors must inform the RECO Registrar’s office within five days of a consumer proposal or bankruptcy filing. A consumer proposal or bankruptcy must also be disclosed on any subsequent application, even once your consumer proposal or bankruptcy has been completed. Various documents must also be provided to RECO at the time of renewal.
RECO advises that under normal circumstances, a bankruptcy will not result in a revocation of registration, however, RECO may request that an applicant voluntarily agree to a set of conditions regarding their registration.
Will a consumer proposal or bankruptcy affect my ability to maintain trust accounts?
We understand that brokers of record who have filed a consumer proposal or bankruptcy may not maintain trust accounts. We recommend that you direct all questions in respect of your brokerage to RECO.
Call us today
If you are a real estate agent or broker facing financial difficulty, give us a call today at 416-800-8756. We will work with you to formulate a plan to eliminate your debt and allow you to resume your life.
For questions regarding the effect of filing a consumer proposal or bankruptcy on your real estate license, we recommend that you contact RECO directly. For more information, RECO has prepared an FAQ sheet which answers many of the questions that you may have about licensing and insolvency.