Consumer Proposals, Bankruptcy and RECO

The Interplay of Consumer Proposals, Bankruptcy, and RECO: A Comprehensive Guide for Realtors

The Real Estate Council of Ontario (RECO) is a regulatory body that oversees real estate professionals in Ontario. Its mission is to ensure that real estate agents operate within the confines of the Real Estate and Business Brokers Act (the “Act”). Although the Act does not specifically mention bankruptcy or consumer proposals, it’s crucial to understand how these financial states can impact a realtor’s professional standing.

Understanding the Role of RECO

RECO’s primary function is to ensure that the public’s interests are safeguarded when dealing with real estate professionals. This oversight includes checking the financial responsibility of individuals engaging in the real estate business. The Act does not allow individuals to conduct business if their past conduct indicates they may not operate with integrity, honesty, or within the legal framework.

The Registration Process with RECO

When a realtor registers or renews their registration with RECO, they have to respond to two critical questions:


  1. Have you been involved in personal bankruptcy or insolvency proceedings, filed a consumer proposal, or been an officer, director, or majority shareholder of a corporation or partnership declared bankrupt or insolvent? If you answered yes, then you must provide details of your bankruptcy or consumer proposal documents, a list of creditors, and discharge papers if available.
  2. Are there any unpaid judgments or debts outstanding against you, including 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 previous statement applies? If yes, then you must list the names of each creditor and the amount of each unpaid judgment or debt.


The answers to these questions are considered by RECO on a case-by-case basis, with Section 10 of the Act in mind.

Considerations for Registration under Section 10 of the Act

Section 10, Part IV of the Act, outlines the criteria for registration or renewal of registration. An individual is entitled to registration or renewal unless:

a) The individual is not a corporation and:

  • i) Considering the applicant’s financial position, they can’t reasonably be expected to conduct business responsibly.
  • ii) The applicant’s past conduct raises doubts about their ability to operate their business legally and with integrity and honesty.
  • iii) The applicant or their employee or agent provides a false statement during application for registration or for renewal.

Note: During renewal, you must allow RECO to conduct inquiries and get information from various sources, including government, regulatory, discipline, or law enforcement records and databases, record of offences, record of judgments, financial institutions, or consumer reports. Providing false information is an offence.

Conclusion and Next Steps

There have been cases where realtors have successfully gone through bankruptcy and consumer proposals without their real estate business being negatively affected. Also, they have been able to renew their membership with RECO.

However, if you’re worried that filing for bankruptcy or a consumer proposal might affect your ability to renew your registration with RECO, it’s recommended to contact them directly. They’re best placed to assess your registration renewal.

Alternatively, you may contact us for a free assessment of your financial situation and a comprehensive explanation of your options to become debt-free. Simply use the form below or call us at the number above.

We hope this guide has shed some light on the interaction between consumer proposals, bankruptcy, and RECO. As a realtor, it’s important to understand these nuances to ensure your professional standing.

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