The Ontario government will assume control of the Real Estate Council of Ontario (RECO), Minister Stephen Crawford has announced.

In a letter addressed to RECO Chair Katie Steinfeld and CEO Brenda Buchanan, Crawford said Friday morning that he has appointed veteran communications and government relations professional Jean Lépine as the administrator of RECO, effective Monday. 

“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 in a post on LinkedIn.

The decision comes following Crawford’s review of a scathing audit by Dentons Canada LLP of RECO’s handling of the $10-million iPro Realty Ltd. fraud scandal.

“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,” said Crawford’s letter.

RECO found on May 19 that a “significant shortfall” was missing from iPro’s. However, the regulator did not move to shutter the firm and freeze its assets until August. RECO subsequently brought in Dentons to conduct an audit into the iPro matter.

 

Agents march for answers on when they will be paid

 

The announcement came as affected agents, some of whom are out six figures in commissions, prepared to march on Queen’s Park in Toronto on Friday morning.

Signs were held with messages such as, “RECO sits on millions. Realtors struggle to eat,” and “Families affected. Thousands of victims. Where is the justice?”

Agents have shared with Real Estate Magazine the heavy emotional and financial toll the situation is having on them and their families. Some have said they are unable to pay for basic living expenses as they wait for compensation.

Consumers have been receiving payouts for their lost deposits from the insurance program funded by Realtors. The Real Estate Trust Account is a statutory trust, which gives consumers legal priority over other creditors, according to RECO’s website.

 

RECO outlines commission claims plan

 

RECO said in a memo on its website Friday that the insurer has received more than 1,500 new submissions since early October. Because claims are still being verified, the insurance program manager is not yet able to issue payouts or seek the court approvals required to help distribute trust account funds, it said.

“Before the program can establish its approach to payment of commission claims, we must first understand the balance of funds in iPro’s trust accounts against the total amounts being claimed,” said RECO. “There remains uncertainty due to the scale and complexity of the alleged fraud at iPro, which is requiring detailed diligence, tracing and verification to properly assess all claims.”

RECO said claims will be treated equitably, not first-come, first serve. Some submissions have already been deemed ineligible.

Once assessments and reconciliations conclude, the program will distribute $4 million in available insurance coverage on a pro-rated basis. RECO expects this to take place in early 2026.

“Once the insurance limits have been disbursed, we will work to secure as much of the frozen assets as possible to pay further amounts,” said RECO.

 

‘Heads need to roll’

 

Toronto Realtor Sandra Jackson has been publicly outspoken about the debacle since the beginning, critical of RECO’s handling of the situation. 

She told Real Estate Magazine she’s pleased that someone from outside the industry was chosen as the administrator. 

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

“I will say that the Ontario government, the ministry, seems to have made a good choice. He’s educated, it appears that he has the experience needed,” she said of Lépine. “I love the fact that’s not industry-related, so no bad buddy-buddy decisions will be made.”

Jackson, who also runs groups teaching real estate law, said she’s hoping Lépine will make bold moves as “heads need to roll on this one,” she said.

 

Lépine has the right to exercise RECO board, officer powers

 

The Ministry of Public and Business Service Delivery and Procurement provided details to REM about Lépine’s authority over RECO. The administrator will report directly and provide regular updates to the department and ministry staff.

According to a department spokesperson:

“The administrator will have the exclusive right to exercise all the powers and perform all the duties of RECO’s board, officers, and members and will oversee and maintain RECO’s operations to ensure that RECO is equipped to effectively regulate registrants and is fulfilling its consumer protection mandate.”

Further, “The administrator will work with the insurer and related parties promptly to support those financially impacted,” reads the statement.

 

‘Put a bulldog in’

 

The Dentons report refers to former RECO registrar Joseph Richer as “experienced, strong-willed, intimidating and protective of his authority,” and argues that this had the effect of discouraging people from challenging him or raising their concerns to senior management or the board. 

The report found that this culture led to Richer entering into the undertaking agreement with iPro’s principals without an appropriate level of visibility from the board or senior management.

Jackson says this cultural dynamic is no excuse.

“If we have people who’ve been hired or voted in that can’t do their job because they said there was a culture of fear, then step aside and we will put a bulldog in who can handle it,” she said.

“The board of directors could have easily contacted the ministry and said, ‘We have a problem here, and we need assistance.’ But they didn’t.”

 

Lawyer says a return to self-governance is best

 

Mark Morris, a real estate lawyer in Ontario with over 20 years of experience who has run some of Ontario’s largest conveyance law firms, says while the RECO shakeup “was necessary,” ultimately, he believes the regulator should eventually return to self-governance. 

“If you have appointed governance, it’s not like they’re going to be making things up. They’re still going to have industry panels, and people who contribute and tell you what’s going on on the ground,” he said. “The reason that self-governance works is that those people who are closest to the action should be the people who are ultimately responsible.”

He hopes the administrator will be a temporary appointment, because “being closer to provincial authority doesn’t mean that it will be a good thing.”

What caused this mess, he said, was that RECO’s leadership did not act on their mandate, but there are people close to the industry who can do so, he said. 

 

Former iPro agent disagrees with administrator appointment

 

Toronto Realtor Jeff Mount has been writing to RECO, demanding transparency and communication with the affected consumers and agents.

Mount is a former iPro agent, who says he got out “just before I got caught up in the problem.”

Mount, now with Web Max Realty, says he isn’t on board with a government-appointed administrator. In a letter to Steinfeld this week, Mount said that he believes an administrator will “only complicate matters more.”

“My gut tells me that we’ll be run by an administrator going forward, and that I don’t think is in the best interest of the registrants or the public,” he told REM. “The administrator will run RECO in the best interest of the government, and not in the best interest of the registrants or the public.”

He said he’s written to Crawford, and the minister has “not returned one of my emails on the subject,” said Mount.

 

RECO gets behind a ‘smooth transition’

 

A RECO spokesperson told REM in an email following the announcement that Crawford “has the firm commitment of our staff and our organization that we will work in close collaboration with the government and incoming administrator.”

RECO did not confirm by deadline if there are any changes to RECO executive leadership positions.

“Our shared goal is to ensure a smooth transition and to continue to drive the necessary reforms already underway at RECO, arising from Dentons’ independent report.”

 

OREA applauds government’s decision

 

For months, the Ontario Real Estate Association (OREA) has been calling for stronger government intervention. 

OREA released a statement from president Cathy Polan on Friday commending Crawford for “decisive action on accountability.”

“This decision by the provincial government will ensure RECO can get back to the basics of fulfilling its consumer protection mandate,” said Polan. “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.”