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The Real Estate Council of Ontario (RECO) has taken significant action against four brokerages in Mississauga, freezing their trust accounts following allegations of improper fund disbursement. On Tuesday, RECO revealed that approximately £2.7 million was allegedly misappropriated from these accounts, leading to a notification to Peel Regional Police. This decisive move aims to protect the integrity of funds held in trust, ensuring they are not misused for unauthorised purposes.
Allegations of Misuse
RECO’s investigation suggests that funds from the trust accounts were unlawfully allocated for various expenses, including loan repayments, property management fees, taxes, credit card bills, and payments for vendor services. The organisation emphasised that these disbursements were conducted outside the legal parameters established for trust accounts.
“The freezing of trust accounts is the most robust measure we can implement to guarantee that funds are safeguarded and not diverted from their intended uses,” RECO stated in a press release. To regain access to the frozen funds, affected individuals will now be required to navigate the insurance claims process.
Regulatory Actions and Responses
In conjunction with the account freezes, RECO has suspended two brokers implicated in these activities and has initiated proceedings to revoke their registrations, as well as those of the involved brokerages. Inspections of other brokerages under the Save Max umbrella revealed no significant issues with their trust account management, indicating that this situation may be isolated.
This incident is part of a broader trend of regulatory scrutiny within Ontario’s real estate sector. In August 2025, RECO ordered the closure of iPro Realty after discovering significant shortfalls in consumer deposit and commission trust accounts, amounting to approximately £10.5 million. At that time, the agency described the situation as a severe breach of legal responsibilities to clients and agents.
Previous Compliance Issues
The fallout from the iPro Realty case raised questions about RECO’s monitoring capabilities. An audit conducted by the Ontario government indicated that while iPro Realty had reported a £10 million shortfall in May, RECO failed to freeze or closely supervise their accounts for nearly three months, allowing the situation to escalate. In light of these findings, RECO’s insurer, Alternative Risk Services, has projected that claims associated with these trust account issues could reach around £30 million.
Industry Implications
The recent actions by RECO underscore the ongoing challenges that regulatory bodies face in maintaining trust and accountability within the real estate sector. As the landscape continues to evolve, the council’s aggressive stance may serve as a warning to other brokerages about the importance of adhering to regulatory standards.
Why it Matters
The freezing of trust accounts and the suspension of brokers signal a critical moment for Ontario’s real estate market, highlighting the necessity for robust oversight and compliance. As trust issues continue to plague the industry, RECO’s measures aim to restore confidence among consumers and investors alike, ensuring that funds meant for real estate transactions are properly safeguarded. This incident not only affects the immediate parties involved but also sets a precedent for how regulatory bodies will respond to future allegations of misconduct within the sector.
