The Ontario government is contemplating taking direct control of the province's real estate regulator, the Real Estate Council of Ontario (RECO), following a critical audit. The review highlighted significant issues with RECO's handling of a case involving "misappropriation" of funds by iPro Realty, leading to a loss of public confidence.
Key Takeaways
- The Ontario government is evaluating whether to assume control of the Real Estate Council of Ontario (RECO).
- This consideration stems from an audit revealing "significant issues" with RECO's practices, particularly its response to iPro Realty's alleged fund misappropriation.
- The audit found a nearly three-month delay in RECO freezing or monitoring iPro Realty's trust accounts despite a reported $10 million shortfall.
- Minister Stephen Crawford has given RECO's board two weeks to respond before a final decision is made.
- RECO has stated its commitment to implementing recommendations from the audit report.
Government's Concerns Over Regulator's Performance
Minister of Public and Business Service Delivery, Stephen Crawford, expressed serious concerns in a letter to RECO's board. He stated that the audit, conducted by Dentons, identified "significant issues with the regulator's practices, processes and procedures." According to Crawford, these deficiencies "contributed to deficiencies in RECO's response to the iPro matter and created an environment in which the real estate sector has lost confidence in its regulator."
The minister further emphasized that the Dentons report raises questions about RECO's capacity to "restore public confidence in the real estate services sector and to protect consumers during one of the largest purchases of their lives."
Audit Findings and RECO's Response
The audit specifically pointed to the handling of the iPro Realty case. It revealed that iPro Realty informed RECO about a $10 million shortfall in its trust accounts in May. However, the regulator reportedly did not freeze or monitor these accounts for almost three months.
In response, RECO acknowledged the audit's findings, stating that the former Registrar "deviated from RECO’s typical approach when dealing with situations involving misappropriation of trust funds." The council's board of directors affirmed their commitment to implementing the report's recommendations for "greater accountability, transparency, and operational improvement" on an expedited timeline. They are currently working collaboratively with the minister to understand the proposed next steps.
