How to Set Up a Personal Real Estate Corporation (PREC) in Ontario — Step by Step
- Natalie Paquette
- 7 hours ago
- 3 min read
Thinking about setting up your own Personal Real Estate Corporation (PREC)? Here’s a clear, step-by-step breakdown to help you through the process — in plain English.
Step 1: Confirm You Qualify
You must be:
A registered real estate broker or salesperson in Ontario.
The only person who will own all the equity (voting) shares in the corporation.
The sole director and president of that corporation.
Family members can hold non-equity (non-voting) shares, but the corporation exists for your professional earnings only.
Step 2: Check with Your Brokerage
Not all brokerages agree to pay commissions through a PREC — it’s optional for them. Before incorporating, confirm that your broker of record is willing to sign an agreement with your PREC.
Step 3: Incorporate the PREC
Your PREC must be incorporated in Ontario (or continued in Ontario if you’re converting an existing corporation).
You’ll need to:
Choose a name (it doesn’t need to include “PREC” or “Personal Real Estate Corporation,” but avoid words that imply you’re a brokerage).
File Articles of Incorporation under the Ontario Business Corporations Act.
List yourself as the sole director and president.
Specify share classes so that you own all equity shares, and only eligible family members (spouse, child, or parent) may hold non-voting shares.
Tip: You can register a numbered corporation if you prefer not to use a specific name.
Step 4: Set Up the PREC Agreement
This is the formal agreement between:
You (the registrant),
Your PREC, and
Your brokerage.
It must clearly outline:
How remuneration will flow from the brokerage to your PREC.
That the PREC cannot trade in real estate or represent clients directly.
That the brokerage continues to employ you as a registrant.
Step 5: Notify RECO
Once your PREC is incorporated, you must notify the Real Estate Council of Ontario (RECO). Send an email to: registration@reco.on.ca with:
Your name (as the controlling shareholder),
The legal name of your PREC,
The PREC’s address for service.
No separate RECO registration is required for the corporation itself.
Step 6: Get Professional Advice
Before (and after) incorporation, speak with:
A corporate lawyer (to ensure your setup meets the legal and structural requirements),
A tax accountant (to understand how to handle income, expenses, and dividends through your PREC).
RECO provides a checklist for Personal Real Estate Corporations, that outlines the conditions and obligations for each PREC. You can also reference Ontario Regulation 536/20 for specific legislative requirements for PRECs.
Step 7: Keep Things Separate
Your PREC can’t:
Hold deposits in trust, or
Be advertised as a real estate brokerage.
It can, however, engage in other types of business or investments — just not real estate trading.
Step 8: Maintain Good Standing
Make sure you:
Bonus Tip
You can use an existing corporation if it meets all the PREC criteria — but check with your lawyer and accountant before repurposing it.
Bottom Line
A PREC can be a powerful tool for Realtors who want to manage their income strategically. If you’re ready to set one up, Launch a Business can help you incorporate in Ontario quickly and correctly — without confusing legal jargon.
Want help getting started? Give us a call or book a free consult - we're here to help make things as simple as possible!
