preserveoakville.ca
March 28, 2025
The Canadian Real Estate Association (CREA) has proposed a $75 special assessment for members to address rising legal expenses. Legal expenses have skyrocketed from $626,000 in 2023 to over $4 million in 2024. The assessment seeks to raise CREA's legal fund from $2 million to $10 million to handle present and future legal battles. While some business leaders support the shift, others question CREA's financial strategy. The next annual general meeting will see voting on the proposal.
CREA is introducing a special assessment by raising legal challenges to the Canadian real estate sector assessment. With litigation against real estate boards and associations developing, the real estate scene has grown ever more complicated. According to CREA Chair James Mabey, legal expenses have surged due to several lawsuits and regulatory investigations. The intended evaluation aims to guarantee financial stability and that CREA has the tools to protect its members.
CREA has cited three key reasons for this proposal:
Litigations aimed at real estate associations and boards have proliferated in the Canadian real estate scene. Two significant cases, the Sunderland and McFall litigations, have been particularly expensive. Continuous Competition Bureau inquiries have also put further financial strain on CREA's legal fund.
Coverage In the past, some legal matters were covered by insurance policies. However, competition-related lawsuits are now considered uninsurable, meaning CREA must cover all associated legal fees. This shift in coverage has significantly impacted the association’s financial planning.
Legal proceedings in real estate require highly specialized legal counsel. As legal battles become more complex, CREA needs expert representation, which comes at a high cost. The increasing number of cases, along with the need for top-tier legal expertise, has led to a surge in expenses.
The proposal has sparked mixed reactions among industry leaders and real estate boards.
Chris Guerette, CEO of the Saskatchewan Realtors Association (SRA), believes that in times of uncertainty, industry professionals must stand together. She argues that the class-action lawsuits currently facing the industry require a unified approach, making the special assessment necessary.
Some real estate leaders, such as Alberta Real Estate Association (AREA) CEO Brad Mitchell, have raised concerns about CREA’s financial management. Mitchell argues that CREA should have planned for these rising legal expenses within its existing budget. He also questions whether a national levy is the best approach, given that real estate regulations differ from province to province.
Year | Legal Costs |
2023 | $626,000 |
2024 | $4,000,000+ |
To further support its legal defense fund, CREA is also proposing an increase in the new member initiation fee.
Adjustment | Previous Fee | Proposed Fee |
Special Assessment | N/A | $75 per member |
New Member Initiation Fee | $200 | $500 |
The proposal has significant implications for real estate professionals across Canada.
● Financial Burden on Realtors: If passed, realtors will have to pay an additional $75, which may seem minimal, but with tens of thousands of CREA members, this translates into a substantial amount.
● Potential Commission Adjustments: Some industry experts suggest that increased fees for realtors could indirectly impact commission structures and property pricing.
● Market Stability: Legal disputes can create uncertainty in the market. A well-funded legal defense may help CREA navigate legal challenges more effectively, ultimately benefiting the real estate sector.
CREA anticipates ongoing legal battles in the coming years. The U.S. real estate market has seen an increase in lawsuits related to commissions and buyer-seller agreements. Similar trends are expected in Canada, reinforcing the need for a strong legal defense fund. Mabey warns that litigation is unlikely to subside, and CREA must be prepared for continued legal challenges.
If CREA members vote against the proposal, alternative financial strategies may be considered, including:
1. Increasing Membership Dues Without the special assessment, CREA may have to raise annual membership dues to cover legal costs.
2. Budget Reallocation CREA may be forced to cut back on programs and services to redirect funds toward legal expenses.
3. Future Fee Increases While the current proposal is intended as a long-term solution, additional fees may be required if legal challenges continue to escalate.
CREA's proposed $75 special assessment has generated mixed reactions within the Canadian real estate industry. While some see it as a necessary step to navigate a litigious environment, others believe financial planning should have mitigated the need for additional fees. The upcoming vote will determine CREA and its members' next course of action.
It is intended to bolster CREA’s legal defense fund to address rising litigation costs.
Ontario realtors may see increased fees, which could influence commission structures and pricing.
While the current request is intended as a long-term solution, further assessments could be proposed depending on legal challenges.
January 14, 2024
Read More
July 19, 2024
Read More
July 25, 2024
Read More
January 6, 2024
Read More