Consumer Protection Fund

Purpose of the Fund

The Consumer Protection Fund (Fund) compensates consumers who suffer a financial loss as a result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an industry professional. Industry professionals pay into the Fund when they enter the industry.

Seek Legal Advice

A lawyer can advise if you might qualify for compensation from the Fund, and if you might require a civil claim prior to making a claim from the Fund.

You may also proceed without a lawyer.

To learn more about the process of filing a lawsuit and obtaining a judgment, visit the Alberta Justice website at http://www.justice.gov.ab.ca. Information on commencing a civil claim is under the heading “Civil Claim.”

Basic Requirements

There are three instances where a person may make a claim against the Fund. A licensed industry professional:

  1. has committed fraud (requires a Court Judgement)
  2. has committed a breach of trust (requires a Court Judgement)
  3. has failed to disburse or account for money held in trust in accordance with section 25 of the Real Estate Act. (does not require a Court Judgement)

Restrictions

The following persons cannot make a claim under the Fund:

  1. any financial institution ( bank, loan corporation, trust corporation, credit union, treasury branch, etc.), whose business includes the lending of money by way of mortgage security or otherwise, or any subsidiary as per section 2 of the Business Corporations Act
  2. any person who Council’s believes knowingly participated in or was willfully blind to the fraud or breach of trust
  3. any corporation or other entity carrying on any business or activity specified or described in the Real Estate Act Exemption Regulations.

Maximum Claim Amounts

Assurance Fund compensation is subject to the following maximums:

Real estate: $35,000 per Fund applicant
$350,000 for all claims against an industry member per event

Mortgage broker: $25,000 per Fund applicant
$100,000 for all claims against an industry member per event

Time Limits for Applying for Compensation from the Fund

For a claim based on fraud or breach of trust, you have one (1) year from the date of the Court Judgment to apply for compensation from the Fund.

For a claim based on failure to disburse or account for money held in trust, you have one (1) year from the date on which the alleged loss or damages occurred to apply for compensation from the Fund.

RECA cannot process your claim if you fail to adhere to this timeline.

Contact Us

If you have additional questions or comments, please call the Real Estate Council of Alberta at (403) 228-2954 or toll free at 1-888-425-2754. You can also write us at:

Attention: Hearings and General Counsel Administrator
Real Estate Council of Alberta
Suite 202, 1506 11 Avenue SW
Calgary, AB T3C 0M9

Email questions to RECA at info@reca.ca. Be sure to direct your question to General Counsel and include “Consumer Protection Fund” in your subject line.

You may also read a full copy of the Real Estate Act on the RECA website here.


Making a Claim Based on Fraud or Breach of Trust

Applications based on fraud or breach of trust require a Judgement from the Courts.

An application to the Fund must include:

  1. A true copy of the Judgment obtained against the industry professional citing they committed fraud or breach of trust (a default judgment is not sufficient)
  2. A copy of the Statement of Claim or other document that started the action which led to the judgment
  3. Evidence satisfactory to the Council that the judgment is final – e.g.  obtaining a Certificate of No Appeal from the court the judgment was issued from after the appeal period has expired
  4. An Irrevocable Assignment of the Judgment from the applicant to the Council, in a form acceptable to the Council (RECA can provide this form)
    A Statutory Declaration stating that the applicant did not participate in nor was willfully blind to the fraud or breach of trust of the industry professional (RECA can provide this form)
  5. Any other information and documents prescribed by the Real Estate Act Ministerial Regulations

You should also advise of any attempts made to collect on the judgment.

Filing a Lawsuit

Any person intending to make a claim against the Fund must:

  1. Provide immediate notice to RECA that you have started an action –  Failure to provide notice may result in RECA barring your claim for compensation
  2. Notify RECA before you note anyone in default – Note in default is a step a plaintiff can take when a defendant does not file a statement of defense within the limits set by the court, and obtain a judgment and damages without the defendants participation. RECA has the right to intervene in these cases and must have the opportunity to decide before you note any industry member in default. Again, failure to provide this notice may result in RECA barring your claim for compensation
  3. Default Judgments are not sufficient – claimants must obtain a finding from the court that the industry professional has committed fraud or breach of trust. That is, a judge must review the facts and make a finding that there has been a fraud or breach of trust.

 

Where to File Your Lawsuit

You may sue in Provincial Court or in the Court of Queen’s Bench. Provincial Court is often faster, less expensive and less legally complicated than the Court of Queen’s Bench. However, judgment recovery amounts differ between the two courts. You should contact the courts or a lawyer for more information in order to determine what court process better suits the specifics of your case.

Time Limits for Filing a Lawsuit

There are time limits to file a statement of claim with the courts, and a failure to abide by the time limits will result in RECA barring your claim (See Limitations Act). For more information regarding time limits for filing a claim, please refer to the Alberta Courts Website here.

 

Making a Claim Based on a Failure to Disburse or Account for Money Held in Trust (Section 25 of the Act)

You do not require a judgement from the Courts when making a claim for compensation resulting from a failure to disburse or account for monies held in trust under section 25 of the Real Estate Act.

Industry professionals hold money in trust for clients and consumers, and must account for that money and disburse it in accordance with the terms of trust in Offers to Purhcase or relationships agreements.

Failure to account or disburse trust money contravenes the Real Estate Act.

Claimants to the Fund for such a situation must provide the Council with:

  1. A Statutory Declaration that contains:
    1. particulars of the basis of the claim
    2. a statement that the applicant did not participate in and was not willfully blind to the actions of the industry professional
  2. Any other information and documents prescribed by the Real Estate Act Ministerial Regulations.

RECA can provide a Statutory Declaration form.

Find additional information relating to information exchanges between the claimant and the industry professional, and claim processing, here.



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