Property management company's licence suspended, accounts frozen in 'urgent' BCFSA order

A sign advertising a rental unit. (Shutterstock)

The B.C. Financial Services Authority has frozen a property management company's trust accounts and suspended its licence after what the regulator calls "repeated failures to provide compliant financial records."

Rent It Furnished Inc., which does business as Rent it Furnished Realty, "has been unable to produce required financial records over the last year," the BCFSA said in a news release and consumer alert published on its website Thursday.

The regulator said the urgent order to freeze the company's rental trust accounts was the latest in "a series of escalating actions" it has taken since RIF entered a consent order with the BCFSA last August.

In the consent order, which is published on the BCFSA website, the company and its managing broker admitted professional misconduct that occurred between February 2017 and September 2020.

Specifically, RIF admitted to failing to identify six shortages in the accounts, which totalled roughly $5,700, as well as failing to take immediate steps to rectify the shortages and failing to notify the BCFSA of a negative balance within 10 days of when it occurred.

Managing broker Pirooz Zarrabian admitted to failing to identify the six shortages, according to the consent order.

The company and Zarrabian agreed to jointly pay a discipline penalty of $17,000, plus $1,500 in enforcement expenses.

According to the BCFSA, RIF has shown a "repeated inability to reconcile its rental trust accounts" since entering the consent agreement.

"Without complete and accurate reconciliations, trust accounts cannot be assessed to determine if funds are handled correctly in accordance with the Real Estate Services Act," the BCFSA news release reads.

"RIF was unable to identify and track specific amounts held in trust for its clients, or how much money its clients were owed."

'Serious impact' on landlords and tenants

The accounts in question are used for disbursing rent payments received from tenants to RIF's clients, who are landlords, the BCFSA said, adding that most of the rental properties the company manages are in Metro Vancouver.

"The decision to freeze the accounts of this brokerage was not taken lightly," said Jon Vandall, the BCFSA's vice-president for compliance and enforcement, in the news release.

"The brokerage’s monthly trust accounts were not reconciled in accordance with the August 2023 Consent Order and have remained deficient. We acknowledge the serious impact this may have on landlords and tenants. A freeze order is the best mechanism to protect trust funds and address the accounting deficiencies of the brokerage. We must take action to protect the interests of consumers and the integrity of the sector."

The result of the freeze order is that RIF's landlord clients won't be receiving any rent payments until the BCFSA unfreezes the accounts.

The regulator said there are "no impacts" to any tenancy agreements as a result of the freeze order, and tenants should continue paying their rent according to the terms of their tenancy agreement.

Landlords "are advised to take the necessary steps to update their rental payment arrangement," the BCFSA said.

The agency published additional information for RIF landlords and tenants in the consumer alert on its website.

"BCFSA may vary the Urgent Order to unfreeze the rental trust accounts if RIF comes into compliance," the regulator's news release reads.

"If it is unable to do so, BCFSA can make an application to the BC Supreme Court to appoint a receiver, who will be responsible for reconciling the frozen accounts and distributing payments to landlords. This process is expected to take some time."