Personal Real Estate Corporation (PREC) is easy and quick form of corporation for salesperson or broker in Ontario. Real estate is a regulated profession in Ontario, so all salespersons and brokers must be registered with the Real Estate Council of Ontario (RECO). We offer custom option for you so you can order as per your business requirements. But right now we are offering you a package with all necessary services your business for only $699.

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PREC Corporation Attributes:

  • The controlling shareholder is registered as a broker or salesperson.
  • The corporation has one single controlling shareholder (a broker or salesperson who owns ALL the equity shares, which are the voting shares).
  • The controlling shareholder is the president and sole director.
  • PREC Must be incorporated under the Ontario Business Corporations Act
  • Any non-equity shares can be owned directly or indirectly by the family members :
    • Spouse,
    • Children or
    • Parents of the controlling shareholder.
  • There is no written agreement or other arrangement that restricts or transfers the powers of the sole director and officer to manage or supervise the management of the business and affairs of the corporation.

Conditions of PREC:

  • The PREC does not carry on the business of trading in real estate other than providing the services of its controlling shareholder to the brokerage that employs that individual.
  • The controlling shareholder is employed by a brokerage to trade in real estate
  • The PREC, its controlling shareholder and others are prohibited from representing to the public that the PREC trades in real estate
  • The PREC does not carry on business as a brokerage
  • The PREC only receives remuneration for trading in real estate from the brokerage employing the controlling individual and the controlling individual only receives remuneration for trading in real estate from the PREC or their employing brokerage
  • The PREC does not, on behalf of the brokerage, directly or indirectly hold any money or other property of a person in connection with trading in real estate

FAQ:

WHAT NAME CAN I USE FOR THE PREC?

There are no limitations or specific requirements with respect to the name of a PREC other than those imposed on any business corporation incorporated or continued under the Ontario Business Corporations Act. The name must meet the normal rules for corporate names and should not suggest that the PREC itself is trading in real estate. An example of an appropriate name would be the individual Registrant’s name followed by a “Professional Real Estate Corporation”. For example: “Jane Doe Professional Real
Estate Corporation”.

CAN A PREC BE USED FOR PASSIVE INVESTMENT PURPOSES?

Yes, a PREC is a regular Ontario Business Corporation Act business corporation and while there are limits on its ability to receive compensation for a trade in real estate, there are no requirements that it refrain from carrying on other activities, such as passive investing. There may be tax and other implications to doing so however and you should consult with a lawyer or accountant for tax advice.

DOES THE HOLDING CORPORATION HAVE TO BE OWNED BY THE REGISTRANT THAT OWNS THE PREC?

Yes, it must meet the same criteria at a minimum as the PREC itself. Please consult your lawyer for further advice on how to do that and on structuring the holding corporation.

WHO CAN BE A NON-EQUITY SHAREHOLDER IN MY PREC?

Members of your family, which includes your spouse, children, a trust for a minor child or children (under 18 years of age) and parents. The definitions of who a spouse, child and parent is are fairly broad. The definition of spouse is “a person to whom the shareholder is married or with whom the shareholder is living in a conjugal relationship outside marriage.” The definition of a child includes one you have “demonstrated a settled intention to treat as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.” The definition of a parent includes a person who has “demonstrated a settled intention to treat [you] as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.” In addition, a trust for minor (under 18) children can own non-equity shares of a PREC.

CAN A HOLDING COMPANY OWN ANY OF THE SHARE OF THE PREC ?

The legislation requires that all the equity shares of the corporation be legally and beneficially owned, directly or indirectly, by the controlling shareholder. It also provides that all the non-equity shares must be owned directly or indirectly by a family member. A family member is a spouse, child, parent, or a trust for a minor child. Whether shares will be held directly or indirectly by the controlling shareholder or a family member is a business decision to be made by the registrant setting up the PREC. Legal advice should be sought to ensure compliance with the law.

ARE THERE ANY RESTRICTION ON ACTIVITIES A PREC CAN ENGAGE IN?

The PREC must not trade in real estate other than to provide the services of its controlling shareholder (broker or salesperson) to the brokerage. There are no restrictions in the legislation on what other activities a PREC might engage in. Permitted activities will depend on the objects of the corporation. However, there may be limitations on the corporation if it is used to operate in another regulated sector.

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