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New Home Construction Regulatory Authority to hold builders to high ethical standards

Grant Cameron
New Home Construction Regulatory Authority to hold builders to high ethical standards

There will soon be a new system and sheriff in place to regulate the people and companies who build and sell new homes in Ontario.

The newly established Home Construction Regulatory Authority (HCRA) will take over those licensing functions from Tarion Warranty Corporation as of Feb. 1. Warranty related claims will still be managed by Tarion.

“This new system will benefit homebuyers by giving them greater confidence in what can be the biggest purchase of their lives,” notes HCRA interim chief executive officer Tim Hadwen. “Homebuyers need the assurance that homes are built properly and professionally and the HCRA will help ensure that through effective regulation.

“We will also introduce a more streamlined process for complaints when homebuyers have real concerns about their builder’s conduct. This new regulatory framework also allows for more decisive action when needed to protect consumers.”

The change is being made as a result of the New Home Construction Licensing Act, 2017, which was recently brought into force. The organization had been recommended by J. Douglas Cunningham, former associate chief justice of the Ontario Superior Court of Justice, who did an independent review and report in 2016 on the Ontario New Home Warranties Plan Act and the Tarion Warranty Corporation.

He investigated how to address perceptions of a possible conflict of interest with Tarion serving as both the warranty administrator and builder licensor.

The new rules will divide the responsibilities for the HCRA and Tarion. The HCRA will regulate and licence new homebuilders and vendors, enforce professional standards, handle homebuyer concerns about the conduct of a builder or vendor, and manage the Ontario Builder Directory. Homebuyers will be able to submit complaints about their builder to the HCRA.

Additionally, the HCRA will accept complaints from homeowners and other stakeholders on suspected cases of illegal building and will be responsible for investigating and prosecuting cases.

New applicants will be responsible for providing a criminal record check to the HCRA as part of their licence application. This is aimed at ensuring applicants can be reasonably expected to obey the law. If an applicant has a criminal record, it does not mean the application will be refused. The HCRA will consider a range of factors, including how much time has passed since the conduct, whether the conduct is part of a pattern of behaviour and steps taken to redress the impact of the conduct.

“The HCRA will enforce high professional standards for builders and vendors — standards for their conduct, their technical competency and their financial responsibility,” Hadwen explains. “We are taking a modernized approach, based on best practices for regulatory authorities engaging in licensing oversight, ensuring compliance, and enforcing standards.

“For the new homebuilders and vendors, they will benefit by having consistent and clearer standards. The HCRA will also ensure a fair marketplace by curtailing unethical and illegal builders. We will also work with builders and vendors to improve the quality of construction in Ontario.”

Tarion will continue to backstop the new home warranties program and manage all warranty-related claims and payouts. The company will also enrol new homes in the warranty program, handle underwriting of vendors and builders, and conduct pre-possession risk-based inspections.

Builders and vendors will still need to be licensed to legally build or sell new homes, but this process will now be conducted by the HCRA. If a builder/vendor has an existing registration in good standing with Tarion, it will become an HCRA licence without any further action required until the licence is up for renewal.

According to Hadwen, most of Ontario’s licenced builders and vendors have a strong record of competency and good conduct and they should have a fair marketplace in which to operate without competition from illegal or unethical competition.

“The HCRA is determined to identify and take action against builders or vendors who try to operate outside or below provincial standards,” he explains. “This is a minority of builders and vendors, but it can result in significant hardships for homebuyers and can damage public confidence and trust in the industry. This is a critical reason why the HCRA is focused on consumer protection and holding builders and vendors to high standards of competence and ethical conduct.”

As a first step, the HCRA intends to educate homebuyers about their rights, what to look for, and the importance of purchasing a new home only from a licensed builder. Then, the HCRA will investigate complaints from homebuyers and other stakeholders about illegal building in a timely way.

The HCRA will encourage compliance by any suspect builder or vendor by ensuring they understand their requirements for licensing under Ontario law and are aware of the consequences of non-compliance.

Hadwen says anyone who knowingly chooses to avoid their legal obligations can expect the HCRA to use a broad range of regulatory tools to curtail that behaviour.

Licences will not be granted to builders or vendors who do not meet the necessary requirements, the government notes, and failing to obtain a licence while continuing to operate as a homebuilder could result in prosecution. The new organization will be self-sustaining through a flat fee paid on a per home basis.

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