New issues arise related to Exit Realty on the Rock trust fund accounts
Bank of Montreal makes application for court to get involved in receivership process
New court filings shed fresh light on when the scope of financial troubles at Exit Realty on the Rock became apparent, and provide new information on who has claims to money held in trust.
Those documents were filed on Tuesday.
- Agents owed money from Exit Realty on the Rock may have longer wait
- Real estate agents owed commissions by Exit Realty on the Rock will get paid
- Anne Squires told agents merger pending in email hours before licence suspension
The Bank of Montreal (BMO), the creditor that kickstarted the private receivership process last month, now wants the courts to get involved.
According to BMO's filings, Exit Realty on the Rock owed the bank nearly $393,000 as of Feb. 29.
The court application notes the bank wrote the real estate company back in October to demand repayment, but Exit Realty on the Rock "did not make any payments to BMO towards the indebtedness."
New details on trust accounts
BMO's filing with the court notes "various issues have arisen with respect to the funds currently held in [Exit Realty on the Rock's] trust account."
- A "deficiency" of $32,700 between the amount of cash held in trust ($124,000) and the amount of the trust liability ($156,750). The "deficiency" would have been worse if it wasn't for a $112,000 deposit the receivers say was made Feb. 3 on behalf of corporate head office Exit Realty Corp. International. That's the day before Exit Realty on the Rock had its licence suspended by the province.
- AccessEasyFunds Limited — a payday loan-type operation which provides advances on commission payments to real estate agents — has made a trust claim of $526,000. According to documents police used to obtain a search warrant last month, the RNC believes Exit Realty on the Rock owner Anne Squires used fraudulent purchase and sales agreements to get her commission from "false" sales in advance. Those allegations have not been proven in court, and no charges have been filed.
- The receiver PricewaterhouseCoopers (PwC) has yet to determine whether any trust amounts are owed to the Canada Revenue Agency.
"As it currently stands, PwC is unable to release any funds without these trust issues being resolved," the bank's court application notes.
"This will likely require an application to court for directions."
In fact, according to the documents, PwC "is of the view that BMO is unlikely to receive sufficient proceeds from the realization of assets of [Exit Realty on the Rock] to pay out the indebtedness."
In other words, the bank is not expecting to get back what it is owed.
Delays in process possible
The new developments could possibly spell trouble for any agent, throughout the industry, owed commissions by Exit Realty on the Rock.
It just blows my mind.- Tom Clift
On Tuesday, the CEO of the Newfoundland and Labrador Association of Realtors told agents the potential move to a court-appointed receivership could delay the process.
"This change could result in a delay in resolving the outstanding claims as a result of further court action," Bill Stirling advised agents by email.
New claims on money held in trust involve the same pot of cash agents hope to be paid from.
Commissions important to agents
Former Exit Realty on the Rock agent Tom Clift told CBC News those commissions are a big deal.
He said national statistics show that an average agent does about seven deals a year.
"So if one of those agents had, say, done two or three deals towards the end of the year, basically half their income is gone," Clift said.
And Clift said he and his former colleagues are "astounded" by the total amount of money involved in the Exit Realty on the Rock receivership.
"We just don't know what to think," he said.
"Really have no idea how anyone could incur that kind of debt, but then again I'm not in the position that, I guess, she was in. I don't know. It just blows my mind."
Meanwhile, the Bank of Montreal application is due to be heard at Newfoundland and Labrador Supreme Court next week.