Tarion and the New Home Construction Regulatory Authority

We reported previously about important changes coming to Tarion, here. As an update, some of those changes are coming into effect soon.

As you have likely seen, there has been a lot of commentary regarding improvements that are needed in relation to Ontario new home construction. The changes discussed here are aimed at making progress in one area – separating the roles of warranty enforcement and builder licensing.

This was just one of the many recommendations made by the Auditor General in her “Special Audit of the Tarion Warranty Corporation” dated October 2019.  But it is hopefully one important step on the road to better consumer protection for Ontario new home buyers.

Concerns Regarding Warranties and Licensing

Tarion currently has two main roles: it ensures builders honour statutory warranty protections, and it is also responsible for licensing and regulating new home builders and vendors. This has raised concerns about the potential for conflicts of interest.

You will remember from our previous post that one of the key changes that the Auditor General recommended (and that the Ontario government has been considering) was to create a new organization – separate from Tarion’s warranty administration – to handle regulation and licensing of new home builders and vendors.  The new licensing and regulatory organization is now set to arrive very soon.

February 1, 2021 – Changes Separate Warranties and Licensing

On February 1, 2021, legislation comes into effect to implement this separation.

The roles of Tarion are to be separated into two administrative authorities: a warranty authority and a licensing and regulatory authority. Once this new legislation comes into effect, Tarion will continue its role as the warranty authority, and the new Home Construction Regulatory Authority (HCRA) will be designated as the regulatory authority.

This means that, as of February 1, 2021, HCRA is taking over the responsibility of licensing and regulating new home builders and vendors in Ontario, while Tarion will continue to administer warranty protections.

The Benefits of Separating the Two Functions

This is potentially an important step toward strengthening consumer protection in this sector because of the independence, new government oversight, and increased focus on public education and awareness promised by this new authority.

Independence

While certain information sharing will be necessary with Tarion, decisions respecting a builder or vendor’s qualifications and licensing will now be made by a body dedicated to that mandate, independent from the administration of warranties. This separation of powers, so to speak, addresses concerns regarding potential conflicts of interest.  The idea is that, in its role as warranty enforcer, Tarion will no longer be affected by separate dealings with builders in relation to licensing and registration. 

Oversight and Accountability

The HRCA will report to the Ministry of Government and Consumer Services, who will monitor the HCRA’s performance through various accountability mechanisms.

Public Education and Awareness

The HRCA’s mandate will also include research and public education. This will hopefully also be a source of important information to help consumers decide on and understand what they are purchasing.

In addition, a new Warranty Information Sheet will be required to be attached to all new purchase agreements as of February 1, 2021. You can see the required forms on Tarion’s website, here. For condominium buyers, this Info Sheet will contain important information about the purchase process, from the pre-delivery inspection to warranty coverage.

January 1, 2021 – The New Residential Condominium Buyer’s Guide

Another change aimed at promoting public education and awareness is the addition of a helpful resource that will be available to prospective buyers as of January 1, 2021 – the Residential Condominium Buyer’s Guide. By virtue of changes to the Condominium Act, 1998, declarants will be required to provide these Guides to buyers of pre-construction condo units, which will contain important information about condo ownership, condo living, and the condo purchase process. You can find a copy of the current version of the Guide on the Condominium Authority of Ontario’s website. Click here to visit the CAO’s page for more information.

We are hopeful that these changes will help to strengthen consumer protection in the new build sector.

Stay tuned to Condo Law News to keep up to date on the latest developments in condominium law!