Is Help On its Way for New Construction Home Buyers? The HCRA Says Yes!

 In Real Estate Law

The real estate market in Ontario is red hot and while bidding wars may have buyers discouraged, there is good news! Buyers purchasing new build homes now have an additional resource to help navigate the daunting world of home builders, vendors, and warranties.

In February 2021 Ontario launched the Home Construction Regulatory Authority (HCRA). The HCRA has been designated by the Ontario government to regulate new home builders and vendors in the province. They are responsible for handling complaints from home buyers and disciplining builders when needed. The HRCA also oversees licensing of builders and maintains a public registry system called the Ontario Builder Directory to help home buyers make informed choices about who to work with. The goal is to create a well-regulated industry that builds better homes, and continues to enhance consumer protection and home buyer confidence.

Tarion Warranty Corporation and the HCRA

Previously, complaints regarding builders and vendors were handled by the Tarion Warranty Corporation (Tarion). Tarion oversaw home warranty administration as well as licensing and complaints. However, Tarion’s close relationship with the building community and its’ alleged hesitancy to investigate claims against builders was creating a growing discontent. In 2016 an independent judicial review of Ontario’s homebuilding sector recommended creating an independent body to handle builder and vendor licensing, customer complaints and enforcement of high professional standards for home builders. Tarion will still be handling all warranty related issues. In order to limit confusion, both Tarion and the HCRA have adopted a “no wrong door approach” meaning that consumers can go to either agency and the agencies with help redirect them if needed.

How can the HCRA help you?

Power imbalances between buyers and builders often favor the builders and can leave buyers feeling helpless and unhappy with the process. The HCRA hopes to help even the imbalances. The HCRA has an expanded mandate and more resources to investigate complaints than Tarion previously had. For homebuilders who knowingly violate their legal obligations, the HCRA can use a range of regulatory tools to curtail this unacceptable behaviour, which include but are not limited to, the power to set conditions unilaterally at any time, to suspend licences, to issue compliance orders, to issue warnings, require education courses and, in the future, they will have the ability to impose fines and administrative penalties. The HCRA website walks home buyers through the process of filing a complaint and what information is needed at each step.

The HCRA also has set up the Ontario Builder Directory. The database provides a list of the province’s home builders and vendors with information about their license status, past convictions, the number of homes they have built, and their track record with warranties. It also provides a list of vendors and builders who are illegally operating in the province. They do not rank the builders and vendors, hoping instead to keep the data they provide quantifiable and objective.

To pay for the increased monitoring and potential litigation of Ontario’s over 5,000 home builders the HCRA has raised licensing fees for builders and vendors.

More information and increased monitoring of Ontario’s home builders, at their expense, is surely welcome news to new home buyers who are navigating this complicated process. Time will tell what the new changes will do to protect consumers and re-level the building fields.

This blog post was written by Daniella Sicoli-Zupo, a Partner in the Real Estate team and Summer Law Student, Magdalena Casey.  Daniella can be reached at 613-369-0378  or at daniella.sicoli-zupo@mannlawyers.com.

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