The Canadian Real Estate Association is proposing a $75 special assessment for members to bolster its legal defence fund amid a flurry of legal issues.
In an email sent to member boards and associations, CREA says its legal costs ballooned from $626,000 in 2023 to more than $4-million in 2024—an increase of nearly 540 per cent.
Since its inception in 2006, the legal fund has maintained a $2-million balance, but the association now wants to raise that amount to approximately $10-million to cover ongoing and future legal battles.
“The legal landscape has become more litigious, not just in Canada but across North America,” CREA Chair James Mabey tells Real Estate Magazine.
Why CREA says the special assessment is necessary
Mabey cites three main reasons for the special assessment request: a rise in litigation, changes in insurance coverage and increasing legal costs. “We’ve been dealing with the Sunderland litigation for a while, and now we have the McFall litigation in addition to the Competition Bureau investigation,” he says.
He explains that competition-related legal matters are no longer insurable, “That means the defence costs fall entirely on the industry.”
Mabey adds that legal fees have risen significantly. “This is a highly specialized area of law, and we need the best counsel to defend CREA and its members. That expertise comes at a high cost.”
Industry support and pushback
Chris Guerette, CEO of the Saskatchewan Realtors Association, says in a statement that while SRA hasn’t always seen eye to eye with CREA, this is a moment to stand together. “In times of uncertainty, it’s important to lean on each other. The class-action lawsuit is one of those situations,” she says.
While some industry leaders support the move, others are questioning the association’s financial management. Brad Mitchell, CEO of the Alberta Real Estate Association (AREA) argues CREA should have planned for the rise in legal expenses.
“Revenue is increasing, not decreasing, so there should be ample funds to cover legal costs,” Mitchell says. “Defending members is one of the core responsibilities of both provincial and national associations, and membership dues should already account for this.”
Mitchell explains his association is currently defending Alberta boards named in the commission lawsuits. “Real estate is a provincial jurisdiction, with different laws, contracts and regulations in each province. Legal defences are handled at a provincial level, so a national levy isn’t necessarily the best solution,” he adds. “These lawsuits have been an issue in the U.S. for years, so this situation shouldn’t be a surprise.”
CREA maintains that its legal defence fund was sufficient until recently, arguing rising legal costs now require additional funding.
“(The legal defence fund) is currently funded through dues, and we have worked hard to balance CREA’s budget. However, the increase in legal costs is too significant to be covered within the existing budget,” says Mabey. The assessment represents nearly 50 per cent of CREA’s annual budget, he says. “Cutting that amount would drastically impact our programs and services.”
The CREA chair warns that the legal challenges facing the industry are unlikely to subside. “We anticipate a more litigious environment moving forward. Even in the U.S., where there have been settlements, litigation has not slowed down. There are pending buyer-side lawsuits there as well.”
When asked whether CREA could request additional fees in the future, Mabey acknowledges the possibility but says the current request is intended to be a long-term solution. “There’s always a possibility, but we have asked for an amount we believe will sustain us for three to four years.”
Next steps
In addition to the special assessment, CREA is also proposing to increase its new member initiation fee from $200 to $500 to replenish its contingency reserve fund. CREA’s member boards and associations will vote on both motions at the annual general meeting in Ottawa on Apr. 8.
The Toronto Regional Real Estate Board, which holds a significant share of voting power, has not publicly commented on how it will vote. In a statement to REM, CEO John DiMichele says, “It would be premature for TRREB to discuss at this stage of deliberations.”
If the assessment fails to pass? “We would need to reassess and possibly look at increasing membership dues,” Mabey says. “We have budgeted responsibly for the upcoming year, but beyond that, we would have to reassess based on legal developments. These expenses are not linear; they depend on court proceedings and regulatory actions.”
Jordana is the editor of Real Estate Magazine. You can reach her by email.