‘Decisive action is required:’ Ontario moves to take over real estate regulator

The Ford government will be adding an administrator to take over the real estate regulator after allegations that iProRealty misused funds.

Ontario is appointing an administrator to assume control of the province’s real estate regulator in the wake of its handling of the iPro Realty scandal.

Minister of Public and Business Service Delivery and Procurement Stephen Crawford confirmed the takeover of the Real Estate Council of Ontario in a letter that was sent to its CEO and the chair of its board on Friday.

He named Jean Lépine as the administrator who will take over RECO as of Dec. 1.

Lépine is described on the Government of Ontario’s website as a “seasoned communications, government relations, investor relations and sustainability executive.”

“Over the past 3 months, I’ve heard from consumers, boards, realtors & brokers who’ve lost confidence in Ontario’s real estate regulator.,” Crawford said on social media. “Our government is taking action to restore trust and to protect Ontarians.”

RECO found on May 19 that the co-founders of iPro Realty allegedly used about $8 million from trust accounts that were meant to be used for down payments and realtor commissions and instead set aside the funds for operating expenses and payments to investors.

However, the regulator did not move to shutter the firm and freeze its assets until August.

RECO subsequently brought in Dentons Canada LLP to conduct an independent audit into the iPro matter.

That audit found that the former registrar of RECO “deviated from RECO’s typical approach when dealing with situations involving misappropriation of trust funds.”

The audit also found that the board was not notified of the iPro issues until Aug. 10, two days after an agreement with its principals was executed.

In his letter, Crawford said the audit identified “significant issues” with RECO’s practices, processes and procedures and raised “serious concerns” about its organizational culture.

“Ultimately, the Dentons final report raises concerns about RECO’s ability to restore public confidence in the real estate services sector and to protect consumers during one of the largest purchases of their lives,” he wrote.

Crawford said that the administrator will “assume control of and responsibility for RECO, including all powers and duties of the board of directors, officers and members of RECO.”

In a statement, the Ontario Real Estate Association (OREA) applauded the move and said that it will help “ensure that the regulator delivers on the reforms they have committed to implementing.”

“This decision by the provincial government will ensure RECO can get back to the basics of fulfilling its consumer protection mandate. Ontario’s real estate regulatory framework must protect both consumers and registrants, safeguarding families making the biggest financial transaction of their lives and shielding Ontarians from unethical behaviour,” the statement notes.

The decision to appoint an administrator to take over RECO’s operations comes on the same day that dozens of protesters gathered outside Queen’s Park to speak out about the iPro scandal and RECO’s handling of the matter.

Ontario NDP Shadow Minister for Public and Business Service Delivery and Procurement Tom Rakocevic and MPP Peter Tabuns joined the protesters and issued a statement after the fact.

“A six-month wait for action following the worst regulatory failure in the history of Ontario’s real estate sector is unacceptable. RECO failed to protect the public interest, and the Ford government turned a blind eye,” they said. “This scandal hurt not just home buyers, but the vast majority of realtors who operate with honesty and integrity. Why did it take the Conservatives so long to stop dismissing the victims of this massive fraud? Today’s news is not enough — they must urgently deliver justice.”

RECO has not yet responded to the appointment of an administrator to take over its operations.

In a statement released earlier this month, the real estate regulator said that it was “fully committed” to implementing all the recommendations made by Dentons on an “expedited timeline.”