An Ontario real estate firm recently sanctioned by the province’s industry regulator is strongly disputing allegations that millions of dollars were improperly handled, calling the measures “unwarranted” and “disproportionate.”
Save Max First Choice Real Estate, through its legal counsel Henein Hutchison Robitaille LLP, issued a statement rejecting claims by the Real Estate Council of Ontario (RECO) that approximately $2.7 million was unlawfully disbursed from four Mississauga-based brokerages’ trust accounts.
“This is not accurate. This did not occur,” the law firm stated. “Contrary to the rumours circulating about what is in Save Max’s trust accounts, no funds are missing.”
Earlier this month, RECO froze the brokerages’ trust accounts, suspended two brokers and issued notices of proposal to revoke the registrations of both the individuals and the brokerages. The regulator alleged that funds were removed from trust accounts and later replaced before the required month-end reconciliation process.
According to RECO, the money was used outside the permitted terms of real estate trust accounts, including for loan payments, property management fees, taxes, credit card balances and vendor services.
Save Max’s legal team argues the regulator’s actions are causing serious harm to the company’s business, agents, brokers and clients. The firm also suggested RECO’s decision may be influenced by broader concerns about its regulatory reputation, particularly as the provincial government considers reforms to oversight of the agency.
“It is well known that RECO failed in its regulatory obligations in handling the iPro Realty trust fund misappropriation scandal,” the law firm said in its statement. “Save Max is not iPro. Nor is this an opportunity for RECO to rehabilitate its reputation as a competent regulator. Jobs and people’s homes hang in the balance.”
RECO declined to comment on the specifics of the case, citing the need to protect the integrity of ongoing regulatory action. However, the regulator emphasized that misuse of trust account funds is a serious breach of the law and public trust.
“Money held in Real Estate Trust Accounts does not belong to brokerages,” said Samantha Pinto, RECO’s chief regulatory modernization officer. “It cannot be used, temporarily or otherwise, for operating expenses, cash-flow management, or any purpose outside what the law expressly permits. Conduct that undermines these obligations will not be tolerated.”
The dispute comes months after the province conducted an audit into RECO’s handling of the iPro Realty scandal, where significant shortfalls in trust accounts were uncovered. RECO ordered iPro to close in August after identifying shortfalls amounting to roughly $10.5 million, later projected by its insurer to reach approximately $30 million in claims.
A provincial audit later found that iPro had informed RECO of a $10-million shortfall nearly three months before regulatory action was taken, raising questions about oversight procedures.
The Ontario government has indicated it is reviewing RECO’s practices, processes and procedures as part of potential modernization efforts.
Save Max’s legal counsel maintains that the current allegations are unfounded and says the company will challenge the sanctions through the appropriate legal channels.
“These allegations, together with RECO’s disproportionate action, have caused serious harm to Save Max’s business, agents, brokers, and clients,” the firm said. “We will respond in the appropriate forum.”
The matter is expected to proceed through regulatory or legal review in the coming months.