In recent years, Ontario, and other provinces, have seen explosive, and nearly unprecedented, growth in the new construction sector. In Ontario, new homes must be covered by a warranty backed by the Tarion Warranty Corporation (“Tarion”), a not-for-profit consumer protection organization established by the Ontario government to administer warranties under the Ontario New Home Warranties Plan Act (“ONHWPA”). For nearly forty years, Tarion has been the delegated administrative authority responsible for licensing home builders and vendors in Ontario.
In 2016, the province ordered an independent review of Tarion and the ONHWPA. As a result of that review, the province introduced the New Home Construction Licensing Act, 2017 (“NHCLA”). Under the NHCLA, the province committed to creating a new regulator for licensing home builders and vendors.
In February of 2021, the government of Ontario created the Home Construction Regulatory Authority (“HCRA”). Going forward, the regulation and licensing of new home builders and vendors in Ontario are the responsibility of the Home Construction Regulatory Authority (“HCRA”). All matters related to homeowner warranty protection remain the responsibility of Tarion.
The HCRA regulates new home builders and vendors in the province and is intended to protect the public interest through a fair, safe and informed marketplace that supports the goal of a continuously improved home building industry in Ontario.
All builders and vendors of new homes must register with and hold a valid licence with the HCRA. Below are the licensing categories:
- A builder of new homes must be licensed as a builder
- A vendor of new homes must be licensed as a vendor
- A builder who builds and sells new homes must be licensed as a builder/vendor
- A builder who builds contract or custom homes on land owned by the owner of the home must be licensed as a vendor and builder
As was the case under the previous Tarion licensing regime, people that wish to build their own home to live in do not generally need to be HCRA registered. These individuals are considered owner/builders provided that they satisfy several criteria:
- owner/builders should not sell the home once they have completed construction
- should not be hiring a builder to build their home and be in control of the project and will be ultimately responsible for the project
HCRA has introduced licensing fees that are intended to cover HCRA’s costs in creating and overseeing a modern licensing regime for builders and the costs associated with ensuring the consumers are protected.
The licensing fees are collected annually and are not based on the license category. A new licence costs $3,000. Renewal fees are $500 annually.
HCRA has also introduced a new Regulatory Oversight Fee – a flat fee of $145 paid on a per-home basis. This fee will be collected by Tarion as part of the new home enrolment process and will then be forwarded to HCRA.
The HCRA has created the Ontario Builder Directory. The directory is meant to act as the official source of background information about Ontario’s more than 5,000 home builders and vendors. The directory is searchable by both the construction location and the builder’s or vendor’s information.
In a move towards enhanced transparency, the new directory will provide consumers with significantly more information than the previous versions of the directory administered by Tarion. For instance, the new directory will disclose any charges laid by the HCRA. Previous versions only displayed convictions.
HCRA has the power to monitor licensed builders and vendors, identify and take action against illegal and unethical builders, and. manage the complaints process for consumers.
After a finding of misconduct, the HCRA can revoke a licence, refuse to renew a licence, or suspend a licence. In addition, the HCRA has broad power to deal with improper and illegal conduct by those that violate the NHCLA.
A conviction for an offence under the NHCLA, ONHWPA, and POA may come with fines; imprisonment; an order to pay compensation and/or make restitution. These cases are heard in provincial court.
First set of HCRA Charges – August 2021
In August of 2021, the HCRA charged Ideal (BC) Developments Inc. with ten counts under the ONHWPA and one count under the NHCLA. The charges relate to freehold properties on Bostwick Crescent in Richmond Hill.
The HCRA alleges that Ideal (BC) Developments Inc. engaged in illegal vending, ie entering into an agreement of purchase and sale without a licence and without being registered with Tarion Warranty Corporation. The count under NHCLA is for allegedly failing to produce evidence during a search warrant.
Second set of HCRA Charges – January 5, 2022
In its second enforcement action since inception, the HCRA has charged property developer Christopher Lamb and his company at the time, 1970175 Ontario Inc., with 52 charges in violation of the ONHWPA.
1970175 Ontario Inc., also known as the Novel Condominiums project in the Niagara Falls area, is charged with twenty-six counts of illegally acting as a vendor of a new home. Mr. Lamb, as an Officer of the numbered corporation, is charged with twenty-six counts in his personal capacity.
In connection with the above charges, the HCRA has also filed a Notice of Proposal where it outlines its intent to refuse renewal licences for other businesses run by Mr. Lamb, including Growth Social Houses Inc. due to not only the above allegations but also criminal charges pending against Mr. Lamb in other proceedings.
The HCRA is actively engaged in ensuring compliance with the new consumer protection provisions of the NHCLA. If you are looking at buying a new home, you would be well advised to ensure that the builders you are considering are properly licensed and registered. Regardless of the outcome of the hearings against Ideal (BC) Developments and Mr. Lamb and his companies, the prospective buyers of those projects likely experienced quite a few sleepless nights worrying about what will happen with their deposits, their investments, and their future homes.
The Mississauga real estate lawyers at Bader Law represent individual and corporate buyers and sellers in both residential and commercial real estate transactions. We will advise you on your options, help secure your interests, and protect your financial investments. Contact us online or at (289) 652-9092 to learn how we can help.