The Ontario government is weighing whether to take control of the Real Estate Council of Ontario (RECO) following a scathing audit that found major failings in the regulator’s handling of the iPro Realty trust fund scandal. In a letter to RECO board chair Katie Steinfeld, Public and Business Service Delivery Minister Stephen Crawford said an independent review uncovered “significant issues” across RECO’s practices, processes, and organizational culture — problems serious enough to erode public trust and destabilize confidence in the entire real estate sector.
Crawford wrote that the audit, conducted by Dentons Canada LLP, raised doubts about RECO’s ability to restore credibility and protect consumers without intervention. As a result, he said he is considering appointing an external administrator to assume control of the regulator. RECO has been given 15 days to respond before the minister decides how to proceed.
The audit was launched in August after RECO abruptly announced the closure of iPro Realty. Investigators found that the brokerage’s co-founders allegedly misappropriated about $8 million from trust accounts meant for buyer deposits and realtor commissions, instead using the funds for operating costs and payments to investors. Although RECO’s investigation confirmed the shortfall, the regulator did not issue fines or lay charges, allowing iPro to continue operating for four more months before shutting down. The brokerage had 17 offices and roughly 2,400 agents across Ontario.
Dentons’ report revealed that RECO’s former registrar “deviated from typical procedures” when dealing with trust fund misappropriation, negotiated a controversial Undertaking Agreement with iPro, and failed to impose any interim safeguards such as freezing accounts or installing monitors. Instead, the registrar relied on iPro’s own records to assess the trust shortfall — information the report says was never independently verified. Negotiations dragged on for nearly three months, leaving trust accounts unmonitored while normal operations continued.
The audit also found that the registrar did not inform RECO’s board of the growing crisis until after the agreement was signed on Aug. 8, 2025. Two days later, the board learned of the issue for the first time. Compounding concerns, one of iPro’s principals, Rui Alves, had served on RECO’s board from 2019 to 2023 — a connection that the report said created a “reasonable apprehension of bias,” even though there was no evidence he influenced decisions.
One of the most troubling elements was a “non-prosecution” clause included in the agreement, which the report said risked undermining public confidence by removing a key enforcement tool. Although the audit accepted that RECO intended to refer the matter to police after the agreement was finalized, the omission of formal protections and delays in oversight were described as “significant failings.”
The fallout has already reshaped RECO leadership. Joseph Richer, the registrar at the centre of the scandal, left the organization in mid-August. On Thursday, RECO publicly released the full Dentons audit, saying it will implement all recommendations on an accelerated timeline and expressed commitment to working with the minister as he considers takeover options.
Crawford said the province is determined to strengthen consumer protection in the real estate sector: “We will ensure strong safeguards are in place so Ontarians can feel secure when purchasing a home.”
The government’s pending decision marks one of the most serious interventions into Ontario’s real estate regulatory system in decades.