Ontario’s real estate regulator is immediately freezing iPro Realty’s accounts to “safeguard funds” after a $10.5-million shortfall was discovered.
The Real Estate Council of Ontario (RECO) said it will freeze the GTA realty’s accounts “to safeguard funds and secure business operations,” according to a press release published on Monday morning.
There will also be an independent audit from Dentons Canada LLP and a “full review” of “ongoing compliance files” currently at RECO.
The regulator will undergo an organizational review to ensure it can meet its consumer protection mandate and strengthen “oversight and accountability,” the press release said.
“RECO’s board of directors takes its responsibility to protect consumers and registrants seriously. We have directed the CEO to take clear and concrete action to protect homebuyers and sellers and real estate agents and to strengthen our ability to deliver on RECO’s mandate,” said Katie Steinfeld, RECO’s chair.
The freeze of iPro’s accounts means that all transactions will now be processed through ClaimsPro LP — insurance investigators for the professional liability policy administered by RECO, the release said.
“The freeze will ensure safeguards are in place while still permitting a process for closure of real estate transactions,” it added.
RECO knew of iPro’s financial shortfall in “late May” but only alerted the public on Aug. 14, announcing it had finalized an undertaking with iPro Realty that will see the windup and closure of the Mississauga-based brokerage and all of its 17 branches by Aug. 19, and that a new real estate brokerage called iCloud would absorb some of iPro agents and their clients.
The move from the regulator was met with concern and protest from the real estate industry.
On Friday, RECO’s CEO Brenda Buchanan announced that its registrar, Joseph Richer, had “left” after spending more than a decade with the regulator, and that she would review RECO’s handling of iPro going forward.
As part of its independent audit, Dentons Canada will review the agreement undertaken by Richer, advise RECO’s board on legal options under the Trust in Real Estate Services Act, 2002 (TRESA) to “ensure greater oversight and governance going forward,” and deliver an interim report to the board by Sept. 30, and a final report by Oct. 30. RECO will release the final report’s recommendations.
An independent accounting firm will oversee iPro’s closure for the remaining iPro transactions, as well as providing forensic audit services.
“I know that the vast majority of agents and brokers meet the highest level of integrity and deliver professional services to the public. The entire board is deeply committed to the effective regulation of the sector and expects that rogue players be held to account for their actions,” Steinfeld said.
“The board will work tirelessly to deliver on our commitment to Ontarians. All real estate transactions must be completed with the utmost honesty and integrity and consumers in Ontario must be protected.”
