Beginning today, all Ontario real estate brokerages can begin submitting a new annual financial filing to the Real Estate Council of Ontario (RECO), giving the regulator a more detailed look at brokerage finances, trust accounts and compliance.

The new requirement, which took effect Oct. 1, applies to all Ontario brokerages. The first filing, covering fiscal years ending between Aug. 1, 2025, and July 31, 2026, must be submitted by Oct. 30.

After that initial filing, brokerages with fiscal years ending on or after Aug. 1, 2026, will have 90 days from their fiscal year end to submit.

According to information published on RECO’s website, the filings are intended to strengthen financial oversight and help the regulator identify potential risks earlier.

There are approximately 3,800 brokerages in Ontario and all are required to comply with the annual financial filing requirements.

“This is not about creating unnecessary administrative burden,” RECO interim CEO Jean Lépine said in a recent column. “It is about bringing regulatory oversight in line with modern risk management practices.”

 

What brokerages have to report

 

The annual filing, details of which was first released in June, goes considerably beyond basic financial statements.

Brokerages must report balance sheet information, including cash, assets, liabilities, equity and certain loans, as well as income statement figures covering revenue, gross profit, expenses and net income.

RECO will also collect information about brokerage bank accounts, including account numbers, financial institutions and whether each is a real estate trust, commission trust, general or other account.

Brokerages must also report the number of ends of trades in real estate during the fiscal year.

Filings are submitted online through RECO’s MyWeb portal.

 

A closer look at trust accounts

 

A substantial portion of the filing focuses on money held in trust.

Brokerages must disclose total trust assets and liabilities, interest earned on trust money retained by the brokerage and information about unclaimed trust money.

That includes amounts where it is unclear who is entitled to the money, cases where the person entitled to it cannot be located and trust money that has remained unclaimed for more than two years.

The broker of record must also answer a series of compliance questions about how the brokerage handled trust money during the year.

 

Brokers of record must attest to compliance

 

Among other things, brokers of record must attest whether the brokerage kept trust money separate from its own funds, maintained sufficient funds to cover its trust liabilities and disbursed trust money according to the terms of the trust.

They must also indicate whether monthly trust reconciliations were completed, reviewed and signed, and whether RECO was immediately notified of any trust-account shortfall and sufficient money deposited to eliminate it.

The filing also asks whether RECO was notified of certain financial problems, including circumstances where a brokerage’s liabilities exceed the realizable value of its assets, it cannot pay liabilities as they come due, or insolvency proceedings have begun or are imminent.

If a brokerage did not comply with a regulatory requirement, the broker of record must explain the nature of that non-compliance.

 

Part of broader financial oversight

 

RECO says the filings are intended to complement its existing audit and inspection work and allow it to better assess risk and direct regulatory resources.

The regulator describes the requirement as part of a shift toward “a more proactive, data-informed regulator.”

RECO plans to introduce monthly trust reconciliation reporting in 2027, which it says will provide more current information to identify trends and potential problems.

Brokerages without trade or trust activity during the applicable fiscal year can make a simplified submission instead of the full financial filing. They will be required to declare that they had no trade activity and upload a trust-account statement from their financial institution.

 

Late filings can trigger escalating penalties

 

According to RECO’s website, brokerages that remain non-compliant after the Oct. 30 deadline should expect progressive enforcement, beginning with a $250 late-filing penalty and escalating penalties if they continue not to file.

After 15 days, a brokerage can be referred to RECO’s Discipline Committee. RECO says it may seek additional fines through the discipline process, while continued failure to file can ultimately lead to suspension and revocation of registration.

Paying a penalty does not eliminate the requirement to submit the filing.

According to RECO, implementing annual financial filings brings Ontario in line with the majority of real estate services regulators across Canada, including Alberta, British Columbia, Saskatchewan, Manitoba, Quebec, Nova Scotia and Newfoundland and Labrador.