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.”