In a significant move impacting the GTA real estate landscape, the Ontario government has announced it is taking over the Real Estate Council of Ontario (RECO), the province’s real estate regulator. Minister Stephen Crawford confirmed the appointment of an administrator, Jean Lépine, effective December 1st, citing a loss of confidence from consumers, realtors, and brokers following the iPro Realty scandal.
The iPro Realty case involved allegations that the company’s co-founders misused approximately $8 million from trust accounts intended for down payments and realtor commissions. These funds were reportedly diverted to operating expenses and investor payments. While RECO discovered the alleged misappropriation on May 19th, action to freeze iPro’s assets wasn’t taken until August, raising concerns about the regulator’s responsiveness.
An independent audit by Dentons Canada LLP revealed that RECO’s former registrar deviated from standard procedure in handling the iPro situation. The audit also highlighted that the RECO board wasn’t informed about the iPro issues until August 10th, after an agreement with the company’s principals had already been executed. Minister Crawford stated that the audit identified “significant issues” with RECO’s practices, processes, and organizational culture, ultimately raising doubts about its ability to restore public trust.
The Ontario Real Estate Association (OREA) has voiced its support for the government’s decision, stating that it will help RECO focus on its consumer protection mandate. Similarly, NDP representatives have criticized the government’s delayed response, calling for justice for those affected by the iPro scandal. This situation underscores the critical importance of a robust and accountable real estate regulatory framework to protect both consumers making significant financial investments and ethical real estate professionals.
This takeover signifies a crucial turning point for real estate regulation in Ontario. The appointed administrator will now assume full control of RECO, including all powers and duties previously held by the board of directors, officers, and members. The GTA real estate community will be watching closely to see how this intervention will address the identified shortcomings and ultimately restore confidence in the market.
