Ontario's government plans to take control of the Real Estate Council of Ontario (RECO) in approximately two weeks. This decision aims to protect the public amid concerns raised by a recent investigative report regarding RECO's handling of the iPro Realty scandal. The letter detailing this action was sent to RECO's board chair, Katie Steinfeld, by Minister Stephen Crawford on Thursday.

The investigative report, conducted by Dentons Canada, highlighted significant issues within RECO's practices and raised serious questions about its organizational culture. In his letter, Crawford stated, "These factors 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."

Crawford expressed concerns about RECO's ability to restore public trust in the real estate services sector, especially during critical transactions for consumers. He noted, "Given the severity of these concerns, I find it appropriate and necessary to consider appointing an administrator to assume control of and responsibility for RECO, to prevent serious harm to the public and consumers’ interests, and to restore confidence in the organization."

The minister has requested a response from RECO's board within 15 days. He stated, "I will make my final decision regarding the appointment of an administrator after reviewing the board’s response, if any."

Additionally, Crawford instructed RECO to publicly release the findings and recommendations from the Dentons report by November 14. The government received the report on October 30, which reviewed RECO's management of the iPro scandal. This scandal involved the illegal disbursement of $10.5 million in agent commissions and consumer deposits from the brokerage's trust accounts.

The report also examined how RECO could enhance its oversight and governance. The scandal drew significant criticism from agents, homebuyers, and brokerages after RECO allowed iPro co-founders Fedele Colucci and Rui Alves to voluntarily terminate their realty licenses without facing charges or fines. Earlier this fall, Crawford warned RECO's board that he would not hesitate to take control if he was dissatisfied with the audit's findings.

RECO has faced intense scrutiny for its actions in the iPro case, which allowed the brokerage to continue operations and conduct over $700 million in transactions for three months after discovering the financial shortfall in May. This shortfall is noted as the largest trust account deficit investigated by RECO.

The regulator indicated that its former registrar, Joseph Richer, had made a deal with iPro’s co-founders. Alves served on RECO’s board from 2019 to 2023. The agreement permitted the founders to terminate their registrations voluntarily, avoiding penalties. Richer left his position in August.

On September 11, RECO sought an emergency injunction from Ontario’s Superior Court to freeze the assets of iPro and its principals, alleging a "trust scheme" involving the misuse of trust funds. A judge granted the order shortly after, allowing RECO to trace and recover the diverted funds. Dentons is representing RECO in the ongoing legal proceedings against iPro. Further developments are expected soon.