RECO and Save Max make a deal to unfreeze brokerages under tight controls

Real Estate Council of Ontario (RECO) says it will lift a freeze on Save Max brokerages, where it discovered $2.7 million in trust account shortfalls earlier this year, but a list of conditions must be met.

In a notice dated April 24, RECO said it has reached an agreement with Save Max that allows the business to operate, but with “strict safeguards in place.”

In February, Ontario’s real estate regulator took enforcement action against four Save Max brokerages after an investigation found millions of dollars were unlawfully moved for purposes outside the terms of the trust, including loan payments, property management fees, taxes, credit card balances and vendor services.

Approximately 400 agents were affected across the Save Max brokerages – Save Max, First Choice, Supreme and Ace.

What Save Max and RECO agreed to

RECO agreed to lift freeze orders and suspensions involving Save Max Real Estate Inc. and First Choice upon the repayment of, and protection against, actual or potential shortfalls in commission trust accounts, bound by a personal guarantee from broker of record Raman Dua.

The lift is also conditional upon an 18-month restriction on Dua’s registration as a broker of record, and the voluntary wind-down and cancellation of registrations for Save Max Supreme and Ace.

Mandatory financial oversight

Save Max will also implement “enhanced accounting protocols,” subject to RECO and independent monitor approval, as well as continued third-party oversight of all brokerage bank accounts, including transaction-level approvals and direct reporting to RECO, until accounting protocols are fully established.

Quarterly RECO inspections of brokerage accounts are also mandatory for a year. 

“This outcome protects consumers and agents, while imposing the necessary level of oversight and accountability required to restore confidence in these operations,” said Samantha Pinto, RECO’s chief regulatory modernization officer, in a statement. “Consumers expect zero tolerance for the misuse of trust funds, and these measures showcase that strong controls are the responsibility of brokerages.”

RECO administrator and acting CEO Jean Lépine said the agreement aligns with new oversight measures being implemented across the industry, like the introduction of mandatory financial filings for brokerages starting this year. 

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