Disciplinary Proceedings (RECO and Local real estate board proceedings)

Receiving a complaint against you from the Real Estate Council of Ontario (RECO) or your local real estate board, is always stressful and confusing, and the consequences of any disciplinary process can have a serious impact on your pocketbook and your reputation, as well as your ability to continue as a registrant.  

Gill & Mulholland LLP has been representing the interests of real estate agents, brokers, and brokerages, in all aspects of disciplinary proceedings for many years. Throughout this time, it has acquired a great deal of experience in, and familiarity with, the rights and obligations of registrants under their governing legislation as well as all aspects of the governance process and the extent of your governing body’s ability to impose penalties.

We make it our goal to bring much needed clarity to the regulatory process and ensure that registrants understand how matters will progress and what is expected of them, while, at the same time, aggressively advocating for their interests in all matters.

It should be noted that although negligence claims are, for the most part, handled through a registrant’s mandatory errors and omissions insurance, responding to disciplinary complaints, and the costs of a lawyer and the payment of any penalties, remain the sole responsibility of the registrant.

If a registrant is faced with a negligence claim (or even a potential claim) arising out of their alleged actions or omissions as a registrant, they should immediately notify their E & O insurer as is a requirement under the policy of insurance. The insurer will assess the claim and appoint counsel to act on behalf of the registrant and under most circumstances, the costs of the registrant’s defence and any civil damages arising from the claim, will be paid for by the insurer. A registrant will be required to cooperate and participate throughout any litigation and must be extremely careful not to prejudice the insurer’s ability to fully defend the registrant by making any statements or admissions without the consent of the insurer.

As stated, however, a registrant is responsible to handle any disciplinary complaints on their own and can therefore be left trying to maneuver the complex regulatory system alone and the results can be severe or they can retain counsel that can advocate on their behalf. 

A complaint can be initiated by a client, another agent or that agent’s client, or directly by RECO. In any case, once a complaint is initiated it is up to RECO to decide whether the complaint shall result in any disciplinary action, which is why initial responses are important. 

A complaint can stem from allegations of breaches of a registrant’s obligations under the provisions of the governing legislation (other than under the provisions of the Code of Ethics) or from allegations of breaches of one or more of the provisions of the Code of Ethics.

The maximum fine that can be imposed on an individual agent or broker for an alleged breach of the Code of Ethics is $50,000.00, plus educational requirements, whereas for a corporation that maximum fine jumps to $100,000.00. These matters are dealt with by the Disciplinary Committee. Under the amendments to the legislation the Disciplinary panel will have the ability to suspend or revoke a registrant’s license. 

If the matter proceeds as a breach of the provisions of the Real Estate Business and Brokers Act (REBBA), other than an Ethics breach, the matter may proceed through Provincial Offences Court where, in addition to the imposition of a fine, there is a possible maximum 2-year prison sentence.

Finally, there is the risk, if the offending behaviour is deemed serious enough, that a registrant’s registration could be in immediate jeopardy. If RECO decides that a registrant’s behaviour creates a risk to the public or that the agent is ungovernable, RECO may take immediate steps to revoke a registrant’s license by serving a Notice of Intention to Revoke. When a Notice of Intention to Revoke is issued by the registrar, the registrant is required, if the registrant intends to dispute the matter, to appeal the decision of RECO to revoke the registrant's license to the License Appeal Tribunal of Ontario.

In addition to complaints involving RECO, registrants are governed by their local real estate boards and risk facing fines and other sanctions arising from allegations of breaches of their respective rules, regulations and the Canadian Real Estate Association code of conduct.  Boards have their own processes in place to govern the behaviour of agents, that often differ greatly from the formal RECO disciplinary proceedings and from each other. 

Given that registrants depend on their ability to legally perform their roles as agents and brokers to make a living it cannot be stressed enough that early access to competent, knowledgeable, and experienced legal counsel is an absolute must. Underestimating the seriousness of a complaint early on is one of the most serious errors that registrants make when faced with a complaint and a request for a response from RECO or from their local Board and doing so may impact how RECO handles the complaint and your defences.

Gill & Mulholland is here to help guide you through the process.