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I am writing to urgently draw attention to a fundamental flaw in Ontario’s real estate regulatory and insurance framework, a flaw that is outdated, inequitable and increasingly harmful to both real estate agents and the consumers we serve.
Under Ontario’s current system, individual agents are required to fund mandatory professional liability insurance as a condition of registration with the Real Estate Council of Ontario (RECO). This insurance includes consumer deposit protection, commission protection, and errors and omissions coverage, and is intended to respond to instances of broker theft, fraud, insolvency, or misappropriation of trust funds.
This framework may once have been sufficient. Today that is not the case.
The real estate market has evolved dramatically: transaction values have multiplied, deposits are larger, trust balances are higher, and the financial risks associated with a single brokerage failure can now reach tens of millions of dollars. Yet the insurance structure and its boundaries have remained frozen in time. The result is a system that no longer reflects the realities of the modern market and wrongly transfers risks to individual actors.
Agents do not maintain trust accounts. We have no control over brokerage banking, reconciliation or disbursement of trust funds. We have no authority to monitor, prevent or correct mismanagement of trust accounts. These responsibilities lie solely with brokers. Nevertheless, individual agents, operating as small, independent businesses, must obtain insurance designed to protect against disruptions that they cannot cause or prevent.
Recent events have shown how broken this model has become. The latest freeze on the trust accounts at Toronto brokerage HomeLife Today Realty Ltd., following a RECO inspection that revealed a significant trust deficit, is a stark reminder that failure at the brokerage level remains an ongoing and real risk. This follows the collapse of iPro Realty, where trust account deficits escalated to tens of millions of dollars, far more than what the current insurance framework can realistically cover.
When the insurance is finally activated, the injustice becomes greater. Total aggregate coverage for all claims arising from a single “occurrence or event” will remain limited to $4 million, an amount completely independent of current transaction volumes and deposit levels. When losses exceed this ceiling, claims are calculated pro rata. Agents, despite completing their work and earning their commissions in good faith, are left last in line and are forced to suffer significant financial losses due to failures completely beyond their control.
This is not only outdated policy, it is a structural injustice.
The system effectively asks agents to subsidize regulatory and brokerage failures while exposing them to financial harm that can devastate livelihoods, families and small businesses. Meanwhile, the entities that have actual custody and control of trust funds do not have to bear full financial responsibility for the risks they pose.
This raises fundamental questions that can no longer be ignored: why are brokers, the sole managers of trust accounts, not required to fully fund insurance linked to the protection of trust funds?
Why are agents, who have no access to or control over trust accounts, expected to absorb the costs and consequences of agent misconduct or insolvency?
Why does an insurance cap designed for a market of the past remain in place when today’s losses could exceed it many times over?
Cops are not the problem. We are regulated professionals committed to ethical conduct, consumer protection and the integrity of the real estate market. We followed the rules, paid the mandatory fees and trusted a regulatory framework that promised protection.
That framework has not been able to keep pace with the sector it governs.
Meaningful reforms are no longer optional. Insurance limits need to be significantly increased to reflect modern market realities. Brokers should be required to have financial responsibility for insurance directly related to the custody of trust accounts. Regulatory oversight must be strengthened to prevent losses before they occur, not just respond after the damage has been done.
Until these changes are implemented, the current system will continue to unfairly punish agents for errors they did not cause or control, and consumers will continue to be exposed to unacceptable risks.
Today, with the Ontario Government’s intervention at RECO and the appointment of Mr. Jean Lépine as the new CEO, there is a critical opportunity to modernize Ontario’s real estate regulatory framework. This moment enables long overdue reforms so that accountability is finally aligned with control, responsibility is properly placed on those who manage trust funds, and consumer and agent protections are real, effective, and reflective of current market realities.
Honestly,
Maria Constanza Florez, Direct Home Real Estate
Agent affected by the RECO-iPro scandal
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