With the goal of improving customer service while enhancing transparency and consumer protection, the Tarion Warranty Corporation recently released an Implementation Plan outlining how it will fulfill recommendations handed down by the Auditor General.
Created in 1976 to administer the Ontario New Home Warranties Plan Act, Tarion is financed entirely by builder registration, renewal and home enrollment fees. Its mandate is to protect consumers of new homes by ensuring builders abide by provincial legislation.
Tarion also works with the building industry to help educate new home buyers about their warranty rights and how to protect and maintain their warranty. Builders must meet the standards listed in the Construction Performance Guidelines, 3rd Edition. Almost every new home in the province is covered by a new home warranty, with protection provided by Ontario’s builders for seven years, backstopped by Tarion.
In October 2019, the Auditor General released a scathing special audit of the corporation, pointing out faults with how Tarion was operating. Those included:
- Dismissing thousands of requests for help from homeowners because they missed the restrictive deadlines, about 1,300 missing the deadline by a single day
- Not rigorously monitoring builders to ensure they operate with integrity, with some relicensed despite problematic behaviour.
- Two-thirds of Tarion staff who are responsible for determining whether builders should have repaired defects under warranty did not have appropriate qualifications.
- Tarion’s process to curb illegal building was not fully effective. As a result, 10-year period, Tarion paid about $19.8 million to new-home buyers to cover the cost of repairs on 869 illegally built homes.
The Auditor General’s audit included more than two dozen recommendations to improve how Tarion operates, and the recent report shows major improvements in many key areas.
“Of the 25 recommendations directed to Tarion in the report, 11 have been completed, with eight more to be completed by the end of this year,” states Peter Balasubramanian, president and chief executive officer of Tarion. “We are committed to implementing the Auditor General’s recommendations as we build a more transparent, fair and accountable new home warranty and protection program – and this plan is the roadmap.”
The remaining six recommendation will be implemented in 2021, he adds, noting that since the release of the report, Tarion has:
- Strengthened corporate governance by protecting the New Home Ombudsperson’s independence, reducing executive compensation and revising corporate bylaws.
- Improved customer service by ensuring targets are met and enhancing quality assurance measures.
- Enhanced consumer protection by eliminating the backlog of investigations into illegal building and homeowner complaints, establishing a new process to complete investigations in a timely manner, and more Ontario Building Code training of staff.
- Increased homeowner access to timely and cost-effective ways to appeal Tarion decisions including piloting an independent, third-party mediation program.
- Created greater transparency by publicly reporting on outstanding issues raised by the New Home Ombudsperson, and adding past convictions and information about exceptions to displaying the dollars in claims paid to the Ontario Builder Directory.
- Stronger oversight of builders by ensuring past performance is considered, requiring better evidence of financial means to complete projects, and investigating all reasons leading to the cancellation of projects.
“As an organization, we recognize we have significant work ahead of us, but we are confident that our modernization efforts will create a stronger new home warranty and protection program for all Ontarians,” Balasubramanian states in the foreword to the implementation plan.
The coronavirus pandemic has been a major roadblock in implementing reforms where public consultation is required, but Tarion is coping with that.
“We have moved the needle despite the severe challenges posed by the COVID-19 outbreak, and the improvements outlined in this plan will have meaningful benefits to homeowners,” Balasubramanian states.
The Home Construction Regulatory Authority (HCRA) is now preparing to be the new regulator of new home builders and vendors under the New Home Construction Licensing Act. Once designated, the HCRA will oversee builder licensing, code of conduct, the builder directory disclosure and compliance, among other responsibilities.
Ontario consumers will soon find more hands-on changes related to their new home purchase. By the end of 2020, there should be a full mediation option in place, allowing for “a simpler, less costly and homeowner-friendly appeals process before requiring homeowners to go before the Licence Appeal Tribunal or court” when they disagree with a Tarion decision.
Tarion is also looking at improving communication with home buyers, meaning email and other forms of digital communication will increase in importance.
I am glad to see that Tarion is making major strides to modernize and improve the new home warranty program. Homebuyers deserve solid protection when they make the biggest investment in their lives, and the building industry also benefits when consumers are confident in their purchases.
Whether you are a homeowner or a builder, speaking to a lawyer with expertise on the Tarion warranty process can help bring more clarity of your rights and responsibilities.