Thousands of Ontario realtors demand ombudsman oversight of RECO amid iPro Realty scandal

A sign outside an iPro Realty office. (CTV News)

Thousands of realtors across the province are demanding ombudsman oversight of the Real Estate Council of Ontario (RECO), the industry’s watchdog, amid the fallout of iPro Realty Ltd.’s multi-million-dollar shortfall that froze commissions and client deposits.

The Ontario Real Estate Association (OREA), representing nearly 100,000 realtors, penned a letter to the provincial government highlighting their concerns of how RECO is investigating the Mississauga-based brokerage.

In August, the real estate watchdog said it would be freezing iPro’s funding, after the co-founders of the brokerage were accused of taking about $8 million from the company’s trust account. The investigation started in May, however, and the company’s trust was still operational for four months.

“In the meantime, about $720 million of new real estate transactions took place, which all had deposits, which went into this trust account, which was shown to be tampered with,” mortgage broker Ron Butler told CTV News Toronto in a previous interview, expressing his belief that the trust accounts should have been frozen at the onset.

Freezing the trust account has hung staffers out to dry, as some of iPro’s realtors have told CTV News that they were instructed to make an insurance claim in order to access their commissions and client deposits that are held in the iPro account.

• READ MORE: Ford government threatens to take control of real estate watchdog as realtors call for answers

In light of that, OREA’s letter to Public and Business Service Delivery and Procurement Minister Stephen Crawford underscores how the livelihoods of iPro’s real estate professionals and their clients have been disrupted, especially amid “growing uncertainty” in the housing market. The brokerage had 17 branches, including two in Mississauga and three in Toronto, and employed roughly 2,400 agents.

“The iPro Realty matter has shed light on the importance of transparent and independent oversight of government bodies in fostering a trustworthy and durable consumer protection framework for Ontario families,” OREA President Cathy Polan and Interim CEO Sonia Richards wrote in their joint letter.

They recommend the province advance the final phase of the Trust in Real Estate Services Act (TRESA) to close any “dangerous loopholes” as well as “strengthen consumer protections and oversight.”

The letter also implores the government to reconsider adding RECO to the purview of the provincial ombudsman, which already oversees more than 1,000 government bodies. Polan and Richards say that, in subjecting RECO to ombudsman oversight, it would “guarantee independent accountability.”

Citing an Environics Research poll of OREA members in 2024, the letter says 60 per cent agree to have this sort of oversight while just 10 per cent indicated they disagreed.

On top of this, OREA’s leaders believe a stronger education program would help prepare real estate agents to navigate Ontario’s “increasingly complex” market.

“The unfortunate reality is that licensing education has weakened over the years, leaving new registrants unprepared for the complexities of a modern real estate market,” the letter reads, recommending a two-year mentorship and an articling requirement for those entering the industry.

OREA says it is committed to working with the government to ensure these reforms can take shape “quickly and effectively,” requesting an immediate meeting with the province on how to carry out regulatory changes.

Province threatens intervention

The Ford government has already indicated it would take the reigns of RECO’s audit if it fails to get to the bottom of how iPro’s funds were misappropriated.

“Following this, I will assess whether further oversight measures or remediation are warranted,” Crawford wrote. “If I am not satisfied with the conduct or the findings of the audit, I will not hesitate to take further measures, including through the appointment of an administrator to assume control of RECO.”

Provincial police announced Tuesday they have launched an investigation into the Mississauga-based brokerage.

With files from CTV News Toronto’s Jon Woodward