A change in how the Ontario home building industry is regulated means more protection for new-home buyers.
Beginning Feb. 1, the province has split the oversight role of Ontario’s home builders in two, letting the long-established Tarion Warranty Corporation maintain its role over new-home warranties, but transferring the licensing and regulating of builders to a new entity, the Home Construction Regulatory Authority, or HCRA.
It’s a move that comes after years of concerns and criticism that Tarion favoured builders over buyers.
“This new system and the HCRA’s creation will benefit home buyers by giving them greater confidence in the biggest purchase of their life,” says Stephanie Donaldson, HCRA’s director of consumer and industry relations. “The HCRA regulates and licenses the builder, meaning that we make sure your builder is competent, exemplifies good conduct and is financially responsible. It is our mandate to ensure home buyers are protected.”
A tainted dispute resolution system
Tarion was created by the province in 1976 to administer the Ontario New Home Warranties Plan Act. Until Feb. 1, Tarion registered builders and other vendors, which allowed them to build homes in Ontario, then confirmed enrolments under the warranty act.
But increasingly in recent years, there were complaints about how Tarion operated. In response, in October 2019, the province’s auditor general released a special audit of Tarion.
The scathing report — which investigated how to address a possible conflict of interest with Tarion serving as both the warranty administrator and builder licensor — concluded that public complaints about Tarion’s dispute resolution process were justified. It also found that the Ontario Home Builders’ Association (OHBA) “had disproportionate influence over Tarion’s decisions and operations” and that half of Tarion’s 16-member board of directors were OHBA-nominated.
As a result, Tarion was overhauled and the HCRA was established.
Tarion will still handle warranty enrolments, as well as backstop new-home warranties and manage warranty claims and claim payouts, such as moderating a dispute between a buyer and their builder over foundation cracks, for instance.
The HCRA, meanwhile, will now license and regulate builders and other vendors, enforce professional standards, handle home buyer concerns about builder or vendor conduct, and manage the Ontario Builder Directory. That means the HCRA will accept direct complaints from home buyers about builder conduct, as well as investigate complaints of suspected illegal building. Where applicable, it will prosecute these cases.
“It’s important for home buyers to be aware about the HCRA because complaints or concerns regarding a builder’s conduct must be directed to us,” explains Donaldson. “The HCRA is introducing a more streamlined process for complaints when home buyers have concerns about their builder’s conduct. It provides an impartial and flexible assessment of concerns from both consumers and builders/vendors.”
Educating buyers
Much as Tarion does, the HCRA will educate potential buyers about their rights, what to look for, and the right questions to ask when considering the purchase of a new home.
A significant change, says Donaldson, is creating more resources for them. One key resource is the builder directory. A searchable database with information about Ontario’s approximately 5,000 licensed home builders and vendors, it allows prospective buyers to ensure the builder they are considering is licensed to build homes in Ontario.
“Our position is: if the builder is not licensed, do not buy from them,” says Donaldson.
“The HCRA is committed to ongoing engagement with all stakeholders — new-home builders and vendors, new-home purchasers and other consumers, government, real estate professionals, municipalities, inspectors, and anyone else with an interest in the new-home marketplace,” says Donaldson.
“We want to make sure that we continue to address the right priorities, identify and address the real risks, are accountable, and above all build confidence and trust in Ontario’s newest regulator.”
