There are three instances where a person may make a claim against the Assurance Fund for any financial loss suffered as a result of the actions of an industry member during the course of a transaction in the business of the industry member. These are:
- Where the industry member has committed fraud;
- Where the industry member has committed a breach of trust; or,
- Where an industry member fails to disburse or account for money held in trust in accordance with section 25 of the Real Estate Act.
Claims made as a result of fraud or a breach of trust may be dealt with in the same manner, and information on these claims is outlined below. Claims where an industry member failed to disburse or account for money held in trust may be dealt with in a similar or different manner. More information about these claims can be found here.
Making a Claim Based on Fraud or Breach of Trust
When fraud or breach of trust committed by an industry member with respect to a trade in real estate or deal in mortgages has caused loss, a person can apply to the Council for compensation from the Fund [see Real Estate Act, Part 4, section 60.2(2)].
An application for compensation must include all of the following:
- A true copy of the Court Judgment obtained against the industry member citing fraud or breach of trust was found to have been committed (a default judgment is not sufficient);
- A copy of the Statement of Claim or other document that initiated the action to which the court judgment relates;
- Evidence satisfactory to the Council that the judgment has become final – this can be demonstrated by obtaining a Certificate of No Appeal from the court from which the judgment was issued after the appeal period has expired;
- An Irrevocable Assignment of the Judgment from the applicant to the Council, in a form acceptable to the Council (a form can be obtained from RECA);
- 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 member that gave rise to the judgment against the industry member (a form can be obtained from RECA) ;
- Any other information and documents prescribed by the regulations.
According to legislation, you need to obtain a court judgment against the industry member who caused you a financial loss or harm. This judgment must have a finding of fraud or breach of trust with respect to a transaction in the business of the industry member.
You should also advise RECA of any attempts made to collect on the judgment.
Before Filing a Lawsuit
There are a few things that a person who is intending to make a claim arising out of the fraud or breach of trust of industry member must do at the beginning of the process in order to minimize any potential issues arising when making a claim from the Assurance Fund.
Any person who is filing a claim against an industry member and who intends to make a claim against the Assurance Fund must:
- Provide Notice that you have started an action – under section 59(1) of the Act on commencement of an action against an industry member that may result in a claim against the Fund you must provide RECA with notice of that action when you file the action. Failure to provide notice may result in your claim for compensation being barred;
- Notify RECA before you note anyone in default – RECA has the right to intervene in these cases and must be given the opportunity to decide before you note any industry member in default. Again, failure to provide this notice may result in your claim for compensation being barred;
- Default Judgments are not sufficient – any person making a claim must put the issue of whether there is fraud or breach of trust and evidence of their damages before a judge and obtain a finding from the court that the industry member has committed fraud or breach of trust;
Note: Items 1 through 3 above are not necessarily required for a claim made as a result of an industry member’s failure to disburse or account for money held in trust pursuant to section 25 of the Act.
Where to File Your Lawsuit
The first question you must answer is whether you wish to 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.
The Assurance Fund may pay up to a maximum of $35,000 per claimant per compensation event for damages or losses related to the business of a real estate industry member to a maximum combined payment of $350,000 for all claimants of a real estate industry member for a single compensation event.
The Assurance Fund may pay a maximum of $25,000 per claimant per compensation event for damages or losses related to the business of a mortgage broker industry member to a maximum combined payment of $100,000 for all claimants of a mortgage broker industry member for a single compensation event.
Time Limits for Filing a Lawsuit
It is important to note that there are time limits to file a statement of claim with the courts and a failure to abide by them will result in your claim being barred (See Limitations Act). For more information regarding time limits for filing a claim, please refer to the Alberta Courts Website here and look under "Court Services" > "Publications."
Time Limits for Applying for Compensation from the Fund
For a claim based on a judgment, you have one (1) year from the date of the judgment to apply to the Council for compensation from the Fund.
For a claim resulting from an industry member’s breach of section 25 of the Act, failure to disburse or account for money held in trust, the application for compensation must be made within one (1) year from the date on which the alleged loss or damages occurred [Real Estate Act, Part 4, section 60.3(2)].
Failure to adhere to this timeline will mean the claim cannot be processed.
If you have additional questions, or if you wish to make a comment about this brochure, please call the Real Estate Council of Alberta (RECA) at (403) 228-2954. If you prefer, you can call toll-free from anywhere in Alberta at 1-888-425-2754. You can also write us at:
Attention: General Counsel and Hearings Administrator
A full copy of the Real Estate Act can be found on the RECA website here.
Real Estate Council of Alberta
Suite 350, 4954 Richard Road SW
Calgary, AB T3E 6L1
You can email a question to RECA at firstname.lastname@example.org. Be sure to direct your question to Legal Services and include in your heading “Assurance Fund.”
For the latest information regarding updates to the Real Estate Council of Alberta Assurance Fund, please refer to this website.