Instead, the provincial government is scrutinizing the very organization responsible for regulating the industry.
A recent independent audit has sparked concerns about the Real Estate Council of Ontario (RECO) and its oversight practices, prompting the government to consider an unprecedented move: taking direct control of the real estate regulator.
At Lendworth, where compliance, transparency, and fiduciary responsibility are central to how we operate, developments like these matter. Here’s a clear breakdown of what happened, why the province is stepping in, and what consumers should know.
What Triggered the Review? A Major Trust Fund Shortfall
In May, iPro Realty disclosed to RECO that its trust accounts were short by approximately $10 million — a serious issue involving alleged misappropriation of client funds.
But according to the audit, the registrar responsible for enforcement did not freeze or monitor iPro’s trust accounts for nearly three months. This delay, the report suggests, deepened consumer risk and eroded confidence in the regulator.
What the Audit Found: Significant Gaps in Oversight
The Ontario Ministry of Public and Business Service Delivery commissioned global law firm Dentons to conduct a full review of RECO’s processes. The findings raised several red flags:
1. Inconsistent enforcement practices
The audit found that RECO deviated from its standard procedures in cases involving trust fund misappropriation.
2. Weak operational and decision-making systems
Issues with internal processes, documentation, and accountability slowed RECO’s response to the iPro incident.
3. Loss of public and industry confidence
The government expressed concern that the regulator may no longer be positioned to effectively protect consumers during real estate transactions — often the largest financial decisions in people’s lives.
Ontario Government’s Response: “Confidence Must Be Restored”
Minister Stephen Crawford issued a formal letter to RECO’s board stating that the findings raise concerns about the regulator’s ability to:
Maintain public trust
Enforce compliance
Protect consumers and the real estate sector
He has given RECO a two-week deadline to respond before the government makes a final decision on whether it will assume direct control of the regulator.
In his words, the issues identified “created an environment in which the real estate sector has lost confidence in its regulator.”
RECO’s Position: Acknowledgement & Commitments to Reform
RECO responded by stating it is committed to collaborating with the minister and has already begun implementing several of Dentons’ recommendations.
According to RECO’s board:
The registrar’s handling of the iPro file was inconsistent with RECO’s usual approach to trust-fund matters.
RECO plans to fast-track changes aimed at increasing accountability, transparency, and operational effectiveness.
The future structure of the regulator, however, remains uncertain.
Why This Matters to Consumers — and Why It Matters to Lendworth
Real estate transactions rely heavily on trust — trust that funds are handled properly, trust that regulators protect the public, and trust that professionals adhere to ethical standards.
When a regulator’s oversight is questioned, the risk extends to homeowners, buyers, sellers, investors, and lenders alike.
At Lendworth:
All trust accounts follow strict compliance protocols
We operate under audited financial controls and transparent reporting
Borrowers and investors receive clear documentation, governance, and communication
We remain aligned with FSRA, government regulations, and industry best practices
As the sector navigates change, Lendworth continues to provide the reliability, compliance, and security that Ontario homeowners and investors expect.
Final Thoughts: A Turning Point for Ontario Real Estate Oversight
The potential provincial takeover of RECO signals a broader push toward stronger consumer protection and higher accountability standards across the real estate and mortgage industries.
Whether the government steps in directly or RECO reforms internally, one thing is clear:
Ontario is preparing for a new era of transparency, oversight, and trust in real estate.
Lendworth will continue to monitor and report on regulatory developments so clients, partners, and investors always stay informed.