Tarion, which administers the mandatory new home warranty program throughout Ontario, says there are builders in Ottawa who are breaking the rules and constructing homes without proper registration.
The scale of the problem is hard to measure because illegal builders don’t rush out to issue news releases describing their status, but Tarion says since 2013, it has opened 72 investigations involving 136 homes in the Ottawa region. In the same timeframe, a total of 66 charges were laid and 47 convictions were obtained in provincial offences court for illegal building.
Under the Ontario New Home Warranties Plan Act, anyone in the province of Ontario who plans to build and/or sell a new home must be registered with Tarion and enrol the homes in the warranty program. Before being granted registration, all prospective home builders are required to successfully complete a technical evaluation based on the Ontario Building Code and undergo a financial viability and business competency analysis, Tarion says.
Siloni Waraich, Tarion’s vice-president of stakeholder engagement, says of the total $13.6 million Tarion paid out in claims in 2017, nearly $3 million was attributed to illegally built homes. Tarion says in many cases, illegal builders encourage homeowners to file for the mandatory building permits themselves and say they are the building their own home – thus weaving through the regulatory loop-hole which allows individuals to build their own homes without warranty registration. Unfortunately, many of these so-called “do it yourself” building projects are shams, and the illegal builder either fails to complete the project, or leaves it with serious deficiencies.
Since July 1, 2015, Tarion and the Ontario Building Officials Association and the Ontario Home Builders’ Association (OHBA) have been testing a pilot to target illegal builders circumventing the registration requirement by posing as owner-builders or urging consumers to do so.
The pilot program requires an owner-builder who applies for a permit to build their own to obtain a Letter of Confirmation from Tarion before the municipality will issue the permit. In some cases, Tarion says, after providing some information to Tarion and reading about illegal building and some of the risks involved in building their own home, homeowners have later returned to the municipality with a registered builder to take out a permit.
Waraich and Joe Vaccaro, the OHBA’s chief executive officer. say they hope that the provincial government will introduce legislation to make the pilot program province-wide; however, with the impending election, there is no idea when it will be introduced.
“We’re disappointed that we’re still waiting for that legislative change,” Vaccaro said. “The reality is that when a consumer looks to build their own home and bring in a contractor, they generally don’t realize the kind of obligations they’re taking on. Things like health and safety, workers compensation issues, and just general building issues.”
Frank Biden, Ottawa’s chief building official, attended the news conference.
One of Ottawa’s most recent illegal building cases arose from a complaint to Tarion by a family in November 2015, concerned that many of the deficiencies in their new home were not being addressed by their builder, Livingstone Development Inc.
“Livingston was a registered builder but when we reviewed our records, it appeared that they were not actually the seller of this home, despite the fact that they claimed to be,” Todd Drain, Tarion’s manager of compliance and investigations, said in a statement. “This was a potential red flag so we dug deeper and took a look at all the properties connected to this builder.”
The investigation, which involved key pieces of information supplied by the City of Ottawa’s building department, revealed multiple illegal building violations of the Ontario New Home Warranties Act involving this and two other Ottawa area homes. These homes were originally sold by an unregistered, numbered company whose director, Brian Arthur Wilson, had been previously convicted by Tarion as an officer/director of other companies in June 2010 and March 2013.
As a result, Tarion said it charged Livingstone Development Inc. with three counts of false information and charged the unregistered company, 2415336 Ontario Inc. with two counts of illegal vending. The defendants pled guilty to all five charges before the courts in February 2018.
Livingstone Developments was ordered to pay $7,500 plus a victim surcharge of $1,875 while 2415336 Ontario Inc, had to pay $10,000 plus a victim surcharge of $2,500.
“In the end, Tarion was able to step in to help the homeowners at two of the homes, and have their defects repaired,” says Drain. “The third home was never completed and the owners ended up walking away from the deal.”
In the Livingstone case, the fines might seem small compared to the damages caused by the illegal building, but Waraich says legislation implemented on Jan. 1, 2018 means fines for provincial offences under the Act have been significantly increased from a maximum of $100,000 for a corporation to a new maximum of $250,000. For individuals, the maximum has increased from $25,000 to $50,000.
“In setting the fines, courts look at repeat offenders,” said Waraich. “They may consider if it was really a one off, or a trend, and if has there been consumer harm. They can actually go to jail – they can serve up to two years less than a day.”
Tarion says home purchasers should sense a red flag when the builder suggests lines like:
“You don’t need a Tarion warranty because I offer my own;
I built the home for myself but decided to sell it instead; or
You don’t need a warranty if you leave my name off the building permit and say you’re building it yourself.”
Homeowners and builders can learn more about the rules and see if a builder is registered with the program by checking the Tarion.com website.