When the licence of a brokerage is terminated or surrendered, the brokerage must cease to carry on business. The procedures to “wind up” the brokerage with RECBC must be completed. The brokerage must surrender to RECBC the brokerage’s licences and the licences of all related licensees that are held by the brokerage. The brokerage must also promptly submit a Brokerage Winding Up Report on the form prescribed by RECBC.
The obligations of a brokerage when winding up the business are set out in section 8-11 of the Rules. RECBC may request financial information in addition to the information contained in the Brokerage Winding Up Report.
The brokerage must arrange for the records that must be retained to be kept by another brokerage, an accountant, lawyer, or notary public, or a person acceptable to RECBC.
A managing broker, director, officer, partner or sole proprietor of the brokerage may assume the responsibility for the winding up of a brokerage and provide the certification required by RECBC.Failure to submit the Brokerage Winding Up Report could delay the licence transfer of any managing broker or director/officer of the brokerage.
The brokerage closure requirements are as follows:
- All licence certificates, with reverse side completed, must be returned to RECBC. This includes the licences of the head office, any branch offices and all licensees. The date of closure must be indicated.
- The Brokerage Winding Up Report must be completed and returned to RECBC attesting to the current balance of all the brokerage’s trust accounts, accompanied by verification from the brokerage’s bank confirming the current trust account balance(s). If the trust account balance equals zero ($0.00), the Brokerage Winding Up Report must still be completed and accompanied by verification.
- All “subject” trades in real estate should have the subject clauses removed prior to the winding up of the brokerage. If this is not possible, the trade (including the deposit monies related thereto) must be transferred to another licensed brokerage prior to the termination of the brokerage’s licence. The brokerage must obtain the written authorization from all parties to the trade prior to transferring it to another brokerage. The foregoing is necessary because the act of removing a subject clause requires the involvement of a licensee pursuant to RESA. It is not necessary to transfer trades that are “firm” or where all subject clauses have been removed. The brokerage may make the usual payouts upon completion of the trade even after the brokerage’s licence has been terminated.
- Any interest that was earned on the brokerage’s general trust account should be paid to the Real Estate Foundation, pursuant to section 29 of RESA.
- Please refer to the section on “Unclaimed Money” for the procedure for dealing with unclaimed money.
If there are adverse claimants related to any trust monies held by the brokerage, the brokerage may apply to the Supreme Court for an order to pay the trust monies into court. Alternatively, the brokerage is required to hold the trust funds in a trust account in perpetuity and re-issue cheques that have become stale-dated whenever feasible. RECBC should be immediately informed when the trust account balance reaches zero ($0.00), except for any unclaimed monies which have not been disbursed. In this instance, the brokerage should provide written details of the unclaimed funds and confirm the manner in which the brokerage will be dealing with these monies.