By raising standards and penalties for builders, the legislation is good news for purchasers of new product
Unlike Bill 184, which sparked angry protests among renters and housing advocates in multiple cities after its passing in the Ontario legislature last week, the province’s new Rebuilding Consumer Confidence Act, aka Bill 159, should receive a warm welcome from the province’s purchasers of new product.
Highlighting its benefits for Ontario homeowners, Ontario Real Estate Association CEO Tim Hudak applauded the Bill’s passing.
“The new Bill would overhaul the Ontario new home warranty and protection program, reform the Tarion Warranty Corporation, and put more of a focus on consumers who are making the biggest financial decision of their lives,” Hudak said in a written statement. “During a time like this, it’s more important than ever that consumers trust the programs and services delivered by administrative authorities like Tarion.”
In a July 15 press release, Ontario’s Conservative government said Bill 159 will “promote higher quality new home construction and reduce defects and warranty claims, while better protecting consumers from bad actors in the marketplace.”
Lofty goals to be sure, but according to Leor Margulies of Robins Appleby Barristers and Solicitors, the changes contained in the Bill aren’t exactly revolutionary.
“It hasn’t made huge changes to the main legislation,” Margulies says, referring to 2017’s New Home Construction Licensing Act, one of the ten acts affected by Bill 159.
But the changes should be impactful for both builders and buyers of new product.
Builders will face more oversight, both before and after a project is constructed, from the Home Construction Regulatory Authority, a body formed in the fall of 2019 to take over the regulatory duties once held by Tarion. Tarion, best known for enforcing warranties around newly constructed homes in the province, has been under considerable fire over the years for consistently disappointing homebuyers, either by siding with builders in disputes (a characterization Margulies disagrees with) or allowing those disputes to go unresolved. It is hoped that HCRA’s pre-project licensing process and power to levy fines and revoke licenses for breaches of contract will force builders to maintain higher standards of conduct and building quality.
“It’s a much broader authority,” Margulies explains of HCRA. “They’re going to look at all the financials, all the records, the experience and background,” of prospective builders during the vetting process, and punish those who have engaged in improper activities.
“That’s something Tarion never had before,” he says. “Now the consumers can go to HCRA and say, ‘Here’s all the bad things that [my builder] did.’ It doesn’t necessarily mean he gets de-registered, but he should get fined for these kinds of activities. There’s now a process for consumer complaints that are not warranty-related.”
According to Emma-Christina Michael, founder and principal lawyer of Michael and Associates, Bill 159 is a step in the right direction. She feels, however, that the legislation may not do all it can to rectify the imbalanced relationship between builders and buyers that typically sees the former come out ahead.
“The contracts are undoubtedly in favour of the builder, and the average Canadian doesn’t understand the extent of the fine print, additional costs, and overall power the vendor has in the transaction,” she says. “It’s rare to find a purchaser who isn’t disappointed in one way or another at the quality of the final product or the final cost implications.”
Despite the improvements contained in the Bill, purchasers, Michael says, may still find themselves in a take-it-or-leave-it scenario if their builders deliver a substandard product. Once they’ve paid their deposit, many of them may consider themselves trapped, with no recourse to exit the deal.
“With a one-sided contract and process, lawyers for new-home vendors have the reputation to be ruthless,” she says. “There is no real spirit of negotiating deficiencies and buyers are left to deal with Tarion directly, or more often than not, just accept the property the way it is.”