The iPro Realty crisis that has consumed the real estate industry in Ontario recently sets a bad example for future discipline cases against agents who may be charged with misappropriation or misuse of deposit funds.
The precedent-setting decision of the Real Estate Council of Ontario (RECO) — the industry regulator — not to prosecute iPro and its principals in the wake of a reported $10.5 million shortfall in deposit and commission money from trust accounts could mean that rogue agents in future might easily escape any serious consequences of their financial misdeeds.
As I see it, RECO’s handling of the iPro case has materially altered the range of penalties for future breaches of the standards of conduct required of agents under the Trust in Real Estate Services Act.
Here is an example of what I mean.
In 2023, ɫɫlife Liberty Realty Inc. of Brampton was charged with unlawfully disbursing money from its real estate trust account, resulting in a deficit that could not be corrected.
In court the following year, the company pleaded guilty and was fined $60,000 after pleading guilty to one count of not preparing a trust account reconciliation statement, one count of not disbursing money from the trust account according to the terms of the trust and one count of failing to replace a shortfall in the real estate trust account.
Letter from Minister Stephen Crawford says government expects sweeping audit to “examine the
It was allowed to surrender its licence voluntarily.
In the post-iPro regime, a brokerage charged with similar offences could easily argue that no charges should be laid and no fine imposed based on what happened — or didn’t happen — to the iPro brokerage.
Mark Morris is a ɫɫ real estate lawyer who is an astute industry observer. I asked him if iPro sets a bad example for future regulatory actions against bad actors. In responding to me, he questioned whether RECO should continue to be responsible for regulating the industry.
“Self-regulation is a privilege,” he replied. “Regulators bestowed with that privilege either take their jobs seriously or face the obvious consequence of inaction — a removal of that authority. After all, what is the purpose of self-regulation if you do not, in fact, regulate?”
I asked RECO the same question. A media representative sent me this statement:
“The events at iPro have been met with decisive action to hold rogue players to account for their actions, assist affected consumers and realtors, and thoroughly review what has transpired.
“RECO has been in contact with law enforcement and will fully co-operate with the authorities in any actions they may take. We need to strengthen, not diminish, trust in the real estate sector.
“Therefore, we are committed to working with government, industry representatives, and other stakeholders to ensure that RECO is equipped to meet its consumer protection mandate, to assess and improve the regulatory function, and to strengthen oversight and accountability within the organization.”
RECO said it’s working with the insurer to expedite deposit and commission claims, with payments
RECO’s statement doesn’t answer the question. It dropped the ball and set an unacceptable example for charges against future bad actors.
The RECO board has engaged an independent legal firm, Dentons Canada LLP, to study the iPro matter. Among other things it will advise the board on legal options under the legislation to ensure greater oversight and governance going forward.
In my view, RECO’s CEO and the entire board of directors must go. The government needs to replace RECO with a new regulator which has the ability and desire to strictly enforce a code of ethics in the public interest. The new body needs to be free of the iPro baggage.
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