RECO Changes Reporting Requirements For Ontario Real Estate Brokerages

Ontario real estate brokerages are facing the most significant regulatory changes since the introduction of the Trust in Real Estate Services Act (TRESA). Following several high-profile trust account issues and brokerage failures, including the widely publicized iPro Realty situation, the Real Estate Council of Ontario (RECO) is implementing new financial reporting requirements designed to strengthen consumer protection and improve oversight of brokerage finances and trust accounts.

For brokers of record and brokerage owners, these changes will introduce new annual reporting obligations, enhanced trust account oversight, and potentially additional reporting requirements in the coming years.

Why Is RECO Making These Changes?

RECO has stated that its goal is to create a more proactive regulatory framework that identifies financial risks before they impact consumers. Rather than relying primarily on periodic inspections and audits, RECO will now collect financial information directly from brokerages to better monitor risk and focus regulatory resources where they are needed most.

The initiative is part of a broader modernization effort aimed at restoring confidence in the industry and strengthening protections for consumer deposits held in trust accounts.

New Annual Financial Filings Begin October 1, 2026

Effective October 1, 2026, every registered Ontario brokerage will be required to submit an annual financial filing through RECO's MyWeb portal. This is a major shift from the current system, where brokerages are not routinely required to submit annual financial information to the regulator.

The annual filing will include:

• Information from the brokerage's financial statements

• Information regarding trust assets and liabilities

• Details about unclaimed trust monies

• Compliance attestations completed by the Broker of Record

RECO has indicated that the information collected will be used to identify emerging risks and direct compliance resources toward brokerages that may require additional oversight.

New RECO Resource

Brokerages can learn more about the upcoming filing requirements here:

RECO Annual Financial Filing Information:
https://www.reco.on.ca/agents-and-brokerages/annual-financial-filing

Accountant Involvement May Be Required

At RECO's Collaboration Summit earlier this year, regulators outlined a proposal that would require an external accountant to review a sample month of trust activity and certify portions of the annual filing. While implementation details continue to evolve, this signals that brokerages may need greater involvement from accounting professionals moving forward.

For many brokerages, this could mean:

• Increased accounting costs

• More detailed bookkeeping requirements

• Earlier year-end preparation

• Additional documentation and record retention

Monthly Trust Reconciliation Reporting Is Planned for 2027

Perhaps the biggest proposed change on the horizon is RECO's plan to introduce monthly trust reconciliation reporting beginning in 2027. RECO has publicly confirmed its intention to move toward monthly reporting as part of a more proactive oversight framework.

If implemented as proposed, brokerages may be required to submit trust reconciliation information on a monthly basis rather than simply maintaining records for inspection purposes.

The objective is straightforward: identify trust account irregularities sooner rather than waiting for periodic inspections or complaints to uncover issues.

For brokerages still relying on spreadsheets or manual reconciliation processes, this change could require significant operational adjustments.

Proposed Changes to Commission Trust Accounts

Another important discussion currently underway involves commission trust accounts.

At RECO's Collaboration Summit, regulators presented two possible approaches for future reform:

Option 1: Eliminate Commission Trust Accounts

Under this model, the brokerage's share of earned commissions would be transferred directly into the brokerage's general account once earned.

Option 2: Expand Regulation of Commission Trust Accounts

Under this model, commission trust accounts would remain but would become subject to the same regulatory requirements and oversight currently applied to real estate trust accounts.

Both options would require legislative amendments to TRESA and have not yet been implemented. However, they clearly indicate the direction regulators are considering as part of broader trust account reform efforts.

Additional Changes Being Discussed

Industry consultation sessions have also generated discussion around several additional measures that could eventually be implemented, including:

• More frequent trust account reconciliations

• Dual authorization requirements for trust disbursements

• Ongoing auditing programs

• Enhanced compliance reviews

• Technology-based monitoring systems

• AI-assisted risk analysis of brokerage financial filings

• Public reporting of aggregate compliance findings

• Whistleblower reporting mechanisms

While these items are not currently mandatory, they demonstrate RECO's intention to adopt a more data-driven and proactive oversight model.

What This Means for Independent Brokerages

Large franchise organizations often have dedicated accounting departments, compliance staff, and corporate oversight systems already in place. Independent brokerages may face a steeper learning curve as these requirements are rolled out.

That said, brokerages that already maintain:

• Accurate bookkeeping

• Monthly trust reconciliations

• Strong internal controls

• Cloud-based accounting systems

• Proper transaction record management

will likely find the transition much easier than those relying on manual or outdated processes.

How Brokerages Should Prepare Now

Whether you're a brokerage owner or broker of record, now is the time to prepare.

Recommended action steps include:

1. Review current bookkeeping and accounting procedures.

2. Ensure monthly trust reconciliations are completed accurately and consistently.

3. Meet with your accountant to discuss upcoming reporting requirements.

4. Review brokerage policies and internal controls.

5. Train administrative staff on trust account compliance.

6. Monitor RECO announcements regarding 2027 reporting changes.

Final Thoughts

The introduction of annual financial filings is just the beginning of a broader transformation in how Ontario real estate brokerages are regulated. RECO is clearly moving toward a system that emphasizes continuous monitoring, proactive risk identification, and stronger oversight of trust accounts and brokerage finances.

For brokerage owners, these changes may create additional administrative work, but they are ultimately designed to improve consumer confidence and strengthen protections for buyers, sellers, registrants, and the industry as a whole.

The brokerages that embrace strong financial controls, accurate recordkeeping, and modern compliance systems today will be best positioned to adapt as additional reporting requirements are introduced in 2027 and beyond.