Consumer Proposals, Bankruptcy and RECO: Information for Realtors

Updated March 1, 2022

The Real Estate Council of Ontario, or RECO, regulates real estate professionals in the province.  It enforces the Real Estate and Business Brokers Act (the “Act”).

The Act aims to protect public interest by preventing individuals who cannot reasonably be expected to be financially responsible in the conduct of business, or whose past conduct affords reasonable grounds for belief that they will not carry on business in accordance with the law and with integrity and honesty.  The Act does not specifically refer to bankruptcy or consumer proposals.

Presently, when considering each registration or renewal of registration RECO asks the following two questions:

#1) Are you now or have you been involved in personal bankruptcy or insolvency proceedings, filed a consumer proposal, and/or been an officer, director, majority shareholder of a corporation or partnership which has been declared bankrupt or insolvent, or is presently a party to bankruptcy or insolvency proceedings?

If you answer yes, then you are asked to provide a copy of your bankruptcy or consumer proposal paperwork, a list of creditors, and discharge papers (if applicable).

#2) Are there any unpaid judgments and/or unpaid debts outstanding against you, including, but not limited to, CRA Requirements to Pay and garnishments, or are you an officer, director, majority shareholder of a corporation or partner of a partnership to which the preceding statement applies?

If you answer yes, then you are asked to list the names of each creditor and the amount of each unpaid judgment or debt.

Your answers to the questions above are considered, on a case by case basis, by RECO with section 10 of the Act in mind.

Section 10. (1), Part IV of the Act, entitled “Registration”, reads as follows:

Registration

10. (1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,

(a) the applicant is not a corporation and,

(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,

(ii) the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty, or

(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration;

Note

When renewing your membership with RECO you must allow RECO to “make inquiries and/or obtain searches of government, regulatory, discipline, or law enforcement records and databases, a record of offences, a record of judgments, financial institutions, or consumer reports.

RECO also warns that “It is an offence to provide false information on this application”

In other words, any misrepresentation is likely to be uncovered.

CONCLUSION

We have assisted dozens of realtors through bankruptcy and consumer proposals, and none of them have had their real estate business impacted as a result.  Similarly, none have been unable to renew their membership with RECO.

If you remain concerned that making an assignment in bankruptcy or consumer proposal might affect your ability to renew your registration with RECO, then we recommend that you contact RECO directly to discuss your situation as only they are able to assess your registration renewal.

Alternatively, you may contact us for a free assessment of your financial situation and explanation of the options you have to be debt free.  

Simply use the form below or call us at the number above.