Ontario’s home-building industry significantly changed on Feb. 1 as the Home Construction Regulatory Authority (HCRA) started operations. The new agency takes over the regulatory and licensing functions previously carried out by the Tarion Warranty Corporation, and I believe the division of powers is a mixed blessing for consumers and the industry.
The creation of this new regulator is an important step in rebuilding the confidence of consumers when they are making what will possibly be the biggest purchase of their lives. Tarion had been responsible for licensing and warranty administration since 1976, but over the years a stream of complaints emerged about its performance.
Builders must ‘operate with integrity’
In October 2019, the auditor general released a scathing special audit of the corporation. The faults found 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 effective. As a result, Tarion paid about $19.8 million to new-home buyers to cover the cost of repairs on 869 illegally built homes during a 10-year period.
The auditor general’s report recommended establishing a separate licensing body. The creation of the HCRA fulfills that objective, with Tarion continuing to deliver Ontario’s new home warranty and protection program. The HCRA will ensure professional standards for the builder, and Tarion will backstop responsibility for the building. While in one sense it may make sense for these two functions to be separated in order to assure consumers that there is no conflict of interest.
Information for home buyers
In addition to licensing, the HCRA provides a wealth of educational information for consumers on their home-buying journey. For example, those thinking about purchasing a pre-construction condominium can learn what should be in a purchase agreement and what to do if there is a construction delay.
There is also guidance on how to work with builders, such as “do your homework … if there are documents that you need to understand before you meet, make sure you’ve read them.”
The HCRA also manages the Ontario Builder Directory – the official registry of all new home builders and vendors in the province. The directory is a must-read for homeowners selecting a builder because it gives such information as the vendor’s licence status and the number of homes or condominiums they have built.
More importantly, it details if they have had any licensing infractions in the past and how much they owe “due to warranty claim(s) investigated and/or resolved by Tarion that have been outstanding for more than 30 days.”
Online complaint mechanism
The third major function of the HCRA is to administer a formal complaints process about the conduct of new home builders and vendors. An online form asks people to detail the circumstances when a vendor or builder failed to meet expectations. Information gathered includes:
- Description of any relevant circumstances that may have led up to or contributed to the event or concern.
- People (if any) who witnessed the event or who would know about the concerns the complainant is raising.
- The complainant’s relationship to the individual(s) and/or company(ies).
- Whether the builder or vendor has been contacted about the complaint.
As Lisa Thompson, Minister of Government and Consumer Services, noted when HCRA was launched, the new body will significantly strengthen consumer protection.
When asked how the Authority will hold builders to account, Stephanie Donaldson, the HCRA’s director of consumer and industry relations, says:
New structure brings new fees
To ensure the Authority has the resources to adequately regulate, and potentially litigate, the actions of the province’s more than 5,000 new home builders and vendors, a new series of licensing fees has been implemented. These include:
- $750 for an umbrella licence, given to applicants that share “at least one common principal, director, officer, or partner with another licensed vendor/builder.”
- $3,000 for a non-umbrella licences, “for a new applicant with no corporate history as a licensee.”
- $500 for an annual renewal fee, that every licensee must pay.
The creation of the HCRA opens an exciting new chapter for the home construction industry in Ontario, but be prepared for a lot of changes. Builders and vendors are welcome to contact me for legal advice about compliance and how the new regulator will affect their day-to-day operations.