Ontario Takes Over Real Estate Watchdog After Big Deposit Shortfall

The province has stepped directly into Ontario’s real estate system, signaling that the problems uncovered at RECO are too significant to ignore. This shift affects buyers and sellers across the province, especially in fast-moving markets where trust account reliability is essential.

Ontario has placed the Real Estate Council of Ontario (RECO) under provincial administration following an independent audit that raised concerns about the regulator’s oversight of financial irregularities at iPro Realty. The province announced that Jean Lepine will assume control of RECO starting December 1.

The decision follows a directive from Stephen Crawford, Minister of Public and Business Service Delivery and Procurement, who earlier gave RECO two weeks to address concerns about its internal practices. Crawford said confidence among consumers, realtors and brokers has eroded in recent months, noting that immediate intervention was required to protect the public interest.

In a letter shared publicly, Crawford said the province acted to stabilize the organization, work with insurers involved in the matter and support individuals affected by the financial shortfall linked to iPro Realty. In May, iPro reported a $10-million discrepancy in its trust accounts. An audit by Dentons Canada LLP found that RECO’s registrar did not freeze or supervise the accounts for nearly three months. By August, the shortfall had been reduced to under $8 million.

Because all buyer deposits in Ontario must be stored in regulated trust accounts, the findings have implications for communities across the province. In Guelph, where deposits represent a significant part of every real estate transaction, strong oversight is essential to protecting consumers in active and fast-moving market conditions.

Lepine, whose background includes senior roles in communications, government relations, investor relations and sustainability across multiple sectors, has been appointed to oversee RECO through the transition.

RECO stated it will cooperate fully with the administrator and the province, noting that reforms identified in the Dentons audit are already underway. Board chair Katie Steinfeld acknowledged the seriousness of the iPro matter, confirming that RECO has taken legal action, secured trust funds, and supported the insurer’s consumer deposit and commission protection claims process.

Steinfeld said affected transactions continued to close and that consumer claims were paid beginning in August. She added that RECO has implemented a new organizational structure to address internal concerns raised in the audit and is committed to working with the province to restore public trust.