Ford Government Set to Assume Full Oversight of Ontario Real Estate Regulator
Ontario’s real estate regulator is getting a new boss.
The province has appointed an administrator to oversee the Real Estate Council of Ontario (RECO) in the wake of the iPro scandal, which raised widespread concerns about the regulator’s ability to protect consumers from theft and fraud.
“To prevent serious harm to the interests of the public and consumers, I have determined that it is necessary to appoint an administrator to assume control of and responsibility for RECO, including all powers and duties of the board of directors, officers, and members of RECO,” wrote Stephen Crawford, minister of Public and Business Service Delivery and Procurement, which oversees RECO.
The letter, which is addressed to Katie Steinfeld, the chair of RECO’s board of directors, and CEO Brenda Buchanan, names Jean Lépine as the administrator. He starts Monday, Dec. 1.
The ministry would not confirm to the Star whether it has instructed Lépine to remove RECO’s board or CEO.
Many industry insiders told the Star they applaud the ministry’s “unprecedented” move but need clarity on what happens next. Some expressed concern about Lépine’s resume, which shows no real experience in real estate.
Crawford has not released the ministry’s terms of reference for the appointment.
In a post on X, Crawford said Lépine’s job will be to “restore confidence in the organization, to work with the insurer, and to support those financially impacted.”
About 75 realtors who have yet to be paid their commissions from iPro deals gathered at Queen’s Park on Friday to urge the government to help make them whole.
Protest organizer Nazie Moseni is owed $150,000 in commission on real estate deals involving iPro Realty, which was one of Ontario’s largest brokerages until August when it was abruptly shuttered following an unprecedented financial breach.
“This is not a joke,” Moseni told the Star. “I ask them (RECO), if their 2025 salary was frozen, what would they do? And no one is able to pay us and take accountability.”
RECO has not reported the total value of insurance claims submitted by consumers and agents impacted by iPro’s sudden collapse. Alternative Risk Services, RECO’s insurance company, told the Star it has paid out many consumer claims but that its “investigation on the commission side is still underway.”
Lépine has spent the last two decades working in communications, government and investor relations. Most recently he served as “chief strategy officer” for Ontario One Call, a public safety administrative authority that people are legally required to call before digging for a project. The service notifies owners of buried infrastructure like gas or hydro lines, who then send a locator to mark the lines to prevent damage or injury.
The government’s decision to take over Ontario’s real estate regulator follows widespread outrage over a deal RECO cut in August with iPro founders Fedele Colucci and Rui Alves, a former RECO board member. The deal allowed the men to avoid charges and fines after their lawyer disclosed a $10-million shortfall from their brokerage’s trust accounts in May just before a scheduled audit.
The regulator did not alert the public to the shortfall until August, allowing the men and the 2,400 agents they employed to transact more than $700 million in home sales before the missing money was revealed. A preliminary review of the company’s books by a forensic accountant hired by RECO reported that Alves and Colucci diverted more than $30 million in trust money to accounts that paid themselves, their other companies, their family members and investors.
The regulator hired Dentons Canada to review RECO’s response to scandal, which the regulator said was the industry’s largest trust account breach. Dentons’ final report, which was shared with the ministry at the end of October and later released publicly on RECO’s website, concluded a single “strong willed” man — former registrar Joseph Richer — orchestrated and executed the deal without the knowledge of the board of directors. RECO’s board “exited” Richer shortly after news of the deal was made public, the report noted.
Dentons’ review confirmed that the CEO and several staff within RECO were alerted to iPro’s breach in May but did not intervene to alert the public or stop the deal.
The Dentons report said Richer’s actions “deviated” from RECO’s “standard process” when trust money is misappropriated, which involves immediately suspending registrants, freezing their brokerage’s bank accounts and issuing a proposal to revoke their licences.
A Star investigation published earlier this week found RECO failed to follow that process in the majority of serious trust misconduct cases over the past five years leading up to the iPro scandal.
When presented with the Star’s findings, RECO’s interim registrar Lisa Key said the majority of the trust misconduct cases identified by the Star are minor and “fall well short of the threshold of egregious behaviour where funds are intentionally removed from trust and disbursed for personal gain.”
Cathy Polan, president of the Ontario Real Estate Association (OREA), which represents more than 100,000 realtors, told the Star the group “fully supports” Crawford’s decision “to ensure RECO gets back to the basics of fulfilling its consumer protection mandate.”
Polan said iPro exposed weaknesses in Ontario’s real estate regulatory system governing brokerage trust accounts and RECO’s inspection and audit policy.
“To address these deficiencies,” said Polan, “we strongly recommend implementing changes to reporting requirements for brokerages, such as requiring brokerages to submit trust account statements. Requiring brokerages to submit the same documentation already required by the Canada Revenue Agency (CRA) would give RECO additional oversight into trust accounts while limiting red tape and costly new requirements.”
Ontario is not the first province to take decisive action against its real estate regulator.
In 2019, the Alberta government fired the real estate regulator’s entire board noting it had become dysfunctional and plagued by internal infighting, following a KPMG audit. The government appointed an interim administrator to improve the regulator.
British Columbia’s government moved to take over its real estate regulator in 2016 in response to several damning reports highlighting the organization’s failures to fulfil its consumer protection mandate. In 2021, the province created a single regulator to oversee financial services sector, including mortgage brokers, insurance companies and the real estate industry.
Bill Duce, CEO of Cornerstone Association of Realtors — representing Hamilton, Mississauga, Burlington and other cities — also supports a ministry appointed administrator, as the regulator still faces issues outlined in the 2022 Auditor General’s report.
“We feel that RECO has had an opportunity to self-correct working off of the Auditor General’s report. And I’m sure they have made some advancements, and yet we still find ourselves in this position,” he said. “So we support the administrator being assigned in this instance because we think it does require an outside perspective to just break any cultural bias or other internal systemic issues that sometimes, if you’re too close to the problem, it’s really difficult to see.”
Nicole Koteff, a real estate broker, lawyer and former in-house counsel at RECO, says she is concerned that the new administrator may be too far removed from the industry to effect meaningful change.
“The fact the ministry has tapped a communications expert to deal with this,” said Koteff. “Makes me think they’re just there to spin the story and not doing anything substantive.”
MPP Tom Rakocevic, the NDP critic for public and business service delivery and procurement, called Lépine’s appointment a step in the right direction but said government needs to more clearly communicate what his oversight will look like.
“Proactive action should be taken,” said Rakocevic, who addressed the realtors at Friday’s protest outside of Queen’s Park as they chanted “shame on RECO!” and “we want change!” He called on the government to work quickly with the regulator to get their lost commissions back.
“People are still owed millions of dollars,” Rakocevic said. “And they deserve it. Now.”
This article was first reported by Reuters
