Feedback Wanted: Option to Segregate Commissions Image

Feedback Wanted: Option to Segregate Commissions


RECA consultation on proposed amendments to the Real Estate Act Rules

RECA is proposing amendments to the Real Estate Act Rules that would allow brokerages to deposit funds in a brokerage “other account.” This account could be used to segregate commissions from which a brokerage could pay professionals’ commissions. If a brokerage sets up the other account as a brokerage trust account, this trust account would not be a RECA-regulated trust account and it could not hold consumer deposits.

The proposed amendments would also clarify that the Real Estate Assurance Fund was and is intended as a consumer protection fund for consumers only.

RECA wants to hear from real estate professionals and consumers about the proposed changes.

Review the Consultation Paper – Proposed Amendments to Real Estate Act Rules 96 and 97 to inform and assist you in providing your feedback.

The deadline for written feedback is October 30, 2018. Send your feedback to:

or mail your feedback to:
Real Estate Council of Alberta
Suite 202, 1506 11 Ave SW
Calgary AB
Fax: (403) 228-3065

RECA wants to hear from you. Your views, comments, and suggestions are welcome and encouraged. We anticipate Council will decide in late 2018 or early 2019 whether it will amend the Rules.

Consultation submissions and responses will be made available on RECA’s website. Individuals will not be named. Consultation responses from industry associations will be posted in full, including the responding organization’s name.


Reasons for the proposed change

1. In early 2016, two large, Calgary-area brokerages closed. Many real estate professionals contacted RECA and their industry associations regarding unpaid commissions owing from these brokerages. Under the Rules, commissions are held in brokerage general accounts.

Shortly after these closures, the Alberta Real Estate Association At-Risk Commissions Working Group (ARCWG) formed with representatives from the Alberta Real Estate Association, the Calgary Real Estate Board, the REALTORS® Association of Edmonton, RECA, and the Real Estate Insurance Exchange. The ARCWG’s goals were to study the issue of commission losses and determine whether there were solutions.

The ARCWG recommended to RECA that RECA amend the Rules to create the proposed option for brokerages. The proposal would allow brokerages to segregate commissions in a brokerage “other account”. Brokerages could choose to set the other account up as a brokerage trust account. However, if a brokerage made this choice, the other account would not be regulated as a trust account under the Real Estate Act.

2. Mitigate Potential Risk to Real Estate Assurance Fund

The Real Estate Assurance Fund was intended as a consumer compensation fund, and not as a commission compensation fund. It was intended to compensate consumers who have lost money due to an industry member’s fraud, breach of trust or failure to disburse or account for money held in trust. The current trust provisions in the Rules need to be clarified and amended to ensure there is no ambiguity with respect to this purpose.