Invoking a rarely used emergency power, the Ontario government has appointed an administrator to take control of the Real Estate Council of Ontario (RECO) after revelations of the regulator’s mishandling of the case of iPro Realty Ltd.
Stephen Crawford, the Minister of Public and Business Service Delivery and Procurement, which provides oversight to RECO, published a letter on social media Friday morning announcing his decision to appoint Jean Lépine as administrator over RECO beginning Dec. 1.
Mr. Lépine has a 20-year career as a communications executive with roles in the federal and provincial governments, as well as with public and private media companies. Most recently, he served as the chief strategy officer for Ontario One Call, the public safety authority known for its “Call before you dig” campaign.
RECO has been facing withering criticism after the misappropriation of more than $10-million from the trust accounts of iPro, once one of the largest brokerages in the province, with more than 2,400 realtors.
Mr. Crawford signalled his intention on Nov. 13 to appoint an administrator after reviewing a report prepared by law firm Dentons Canada LLP on RECO’s handling of the iPro affair. He said at the time that it raised serious concerns about the regulator’s organizational culture.
“Given the severity of these concerns, to prevent serious harm to the interests of the public and consumers, I have determined 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,” Mr. Crawford wrote Friday.
Ontario regulator shuts down iPro Realty after finding $10-million shortfall in trust accounts
RECO performs a regulatory function but is not a government department; it’s a non-profit corporation that enforces professional standards and discipline for more than 110,000 realtors and brokers.
Despite this arm’s-length relationship with government, Mr. Crawford can legally appoint an administrator under legislation that gives the cabinet the authority to supplant the leadership of delegated and administrative authorities such as RECO.
Under the statute, the effect of such an appointment is to immediately remove the board, turning the administrator into a sort of super-executive. It also insulates the administrator from legal liability.
On Tuesday, RECO’s board chair, Katie Steinfeld, broker of record with On The Block Realty, sent a letter to Mr. Crawford saying RECO had begun to respond to concerns about its organizational culture and effectiveness, adding that it hoped to “work collaboratively with the government” while defending its management of the iPro matter.
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Many in the industry welcome the potential shakeup the government’s takeover of RECO could bring.
“This decision by the provincial government will ensure RECO can get back to the basics of fulfilling its consumer protection mandate,” said Cathy Polan, president of the Ontario Real Association.
“I don’t want to be the person saying everyone’s got to go. I would say do a major reset,” said John Lusink, a former RECO board member and vice-chairman of Realservus, the parent company of Ontario’s largest brokerage, Right at Home, with more than 6,200 realtors.
Mr. Lusink said the first place the administrator could look for ideas to reset the regulator is a 2022 Auditor-General’s report that warned RECO was woefully behind on routine financial inspections of brokerages.
In iPro’s case, it was the threat of an audit last May – the first inspection in years – that prompted it to report the missing trust fund money to RECO.
