Ontario’s new home regulator “favoured the interest of builders over homeowners” with the result that thousands of requests for help from new homeowners were dismissed, says a report by Auditor General Bonnie Lysyk.

“We found that the strong presence of homebuilders on the Tarion board of directors, combined with Tarion’s internal requirement that it seek advance consultation with the Ontario Homebuilder’s Association on any proposed changes to its regulations, created an imbalance at Tarion that favoured the interests of builders over homeowners,” Lysyk says in a news release.



“Most new homebuyers and builders usually resolve most problems without the need for Tarion to intervene,” Lysyk says, “but in cases where builders do not honour their warranties, it was often difficult and time-consuming for homeowners to navigate Tarion’s processes.”

The Special Report came at the request of the Legislature’s Standing Committee on Public Accounts, which passed a motion last year requesting a value-for-money audit of Tarion.

It says Tarion dismissed thousands of requests for help from homeowners who missed Tarion’s restrictive deadlines. New home buyers who cannot get satisfaction from their builder in the first year of occupancy can ask Tarion to intervene by submitting a form, but the Auditor General says, “Surprisingly, this submission is allowed only in the first 30 days and the last 30 days of that first year of occupancy (unless it is an emergency). Between 2014 and 2018, Tarion refused about 9,700 requests for assistance that fell outside one or two of the 30-day periods for filing.”

The report says Tarion’s process could take 18 months before compensating a new home buyer for a builder’s defect.

The Auditor General also says senior management at Tarion was rewarded for increasing profits and minimizing payouts to homeowners. Bonuses of 30 to 60 per cent of their annual salaries were based partly on increasing profits.

The Auditor General says this is “an approach that would appear better suited to a private-sector for-profit company than to a government-delegated not-for-profit corporation with a consumer-protection mandate.”

It also says Tarion’s Homeowner Information Package, provided to homeowners, “leaves the incorrect impression that it is Tarion, rather than their builder, that provides warranty coverage. Even the name Tarion Warranty Corporation, contributes to the confusion and could lead some people to incorrectly believe that they lose their warranty rights if they miss Tarion’s deadlines.

Tarion also continued to issue licences to builders with poor warranty records, says the report. “Some builders refused to honour some of their warranties, forcing Tarion to fix the defects or pay out compensation to homeowners, yet these same builders were routinely able to renew their licences without reimbursing Tarion. In those rare cases where licences were revoked, some builders were able to continue to build homes by creating a new company – and successfully obtaining a new licence from Tarion – or by partnering with an existing

company,” says the Auditor General.

In a statement, Tarion says it accepts the Auditor General’s recommendations and will begin working towards their implementation.

It says in recent months, the organization has taken steps to enhance protection for consumers. This includes enhanced disclosure for purchasers buying pre-construction condominiums, updates to the Ontario Builder Directory and public disclosure of compensation to improve transparency, Tarion says.

“The purchase of a new home is the most important investment that many Ontarians will make, which is why we’re constantly listening to consumers, builders and other experts to explore improvements,” said Howard Bogach, CEO of Tarion, in a statement. “With this in mind, we thank the Auditor General for her recommendations and look forward to acting on them with the best interests of homeowners in mind.”

7 COMMENTS

  1. In 2006 I purchased a freehold townhome. After considerable investigation I discovered that the structure had a serious latent defect. I contacted TERION and after much back and fourth discussion I was told that I had missed the deadline to advise TERION formerly of the deficiency by a few days. Part of the delay was TERION’ cumbersome administration process when filing a complaint application. TERION wiped their hands of the problem via a letter to me denying any assistance. Fortunately and given the seriousness of the latent Defect the Builder stepped in and corrected the problem at their cost with no input from TERION.
    This bitter experience left me wondering what TERION’ purpose is. It appears to me it’s to help the contractors save funds through inaction on TERION ‘ part particularly as it relates to complaints.

  2. Now only they are finding the truth. Tarion is totally contractor side not even a single percent to home owners. I got totally upset after I had problems with my new home and Tarion didnt resolve my issue. Government has to take serious action on this board.

  3. When I purchased my home in 2010 I did some research and came to find that 11 of the 16 board members were from the Ontario Home Builders Association. It was evident to me that it was going to be an uphill battle and that I would have to be extremely persistent. I later received a request to attend one of their annual meetings
    and my response was a rezounding no. I questioned why I would want to attend an annual meeting for customers when 11 of 16 board members are from the OHBA. That would be like sending me to a boxing match with my eyes blindfolded, my hands tied behind my back and my legs shackled.

  4. Correction re my earlier post: TARION is insured by a reinsurance company against catastrophic payout losses which would render it insolvent, not against loss of profits. My mistake. B.M.

  5. Congratulations to the government for finally looking into Tarion and how it does not adequately protect home buyers. Like thousands of others, I had occasion to file a claim and Tarion did absolutely nothing other than demand fees and ultimately advise me that they would not be looking after the defects. It is time to make Tarion fulfill its mandate and this cannot be done while the current structure remains in place. Let’s encourage the government to take the next step in this important process.

  6. Speaking as a former conciliator with the Ontario New Home Warranty Program (now TARION) from the mid 1980’s to the early 1990’s, I can say that the non-profit entity of those days was not builder-friendly as currently alleged by the Ontario Auditor General…at least as far as how ‘I’ treated ‘my’ complainants. There were no two-time-only, thirty-day-only windows of opportunities for new homeowners to file their warranty complaints in writing against their builders. Something seems to have changed over the years within the culture of this corporation. It’s called politics.

    Most first year warranty claims by new homeowners are subjective in nature, other than Ontario Building Code violations. What one homeowner would not be concerned about, another can’t stand. What one homeowner thinks is substandard workmanship or defective material, another overlooks. It would be up to the conciliator to judge these sometimes iffy, sometimes valid, warranty claims. Legitimate concerns, those obviously substandard materials or workmanship related defects, were not very difficult, for me at least, to determine to be warrantable by the builder in question. Judging from this article, it appears that the conciliators of today do not have as much leeway to decide whether or not items claimed by the homeowners are indeed warrantable, if they get to judge them at all. And if so judged, it seems from the tone of this article that judgements might favour builders’ pocketbooks. Could payoffs be part of the game?
    I know of at least one conciliator during my time who was paid off to call items in the builder’s favour. Could this be happening at the upper level of TARION? Who knows? It’s certainly possible. Corruption often finds a happy home within the politics of government-corporate relationships.

    I am not aware during my stint with the then-named O.N.H.W.P. that senior officials within TARION’s head office were paid bonuses for hording corporate money, somewhat like what many think happens with an insurance company, which in effect, is exactly what TARION is…only supposedly it is non-profit in nature. The thing is, the homeowners pay the insurance premium. The idea behind the original legislation of 1976 was to protect the homeowner from shoddy workmanship and defective materials, not to protect the TARION insurance company (mandated by the Bill Davis Conservative government of the day) against loss of profits. That’s what TARION is reinsured against by a reinsurance company like LLoyds of London…again paid for by the homeowners. If upper management types within TARION’s hallowed halls are indeed benefiting financially on the sly from builder favourtism (very hard to prove), their asses should be roasted, kicked to the curb, and thrown in jail.

    Something just don’t smell right in Ontariario.

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