Ontario’s Conservative government has announced it plans to move forward with changes originally proposed by the previous Liberal government to change the provincial regulatory framework for new home and condo construction, by separating the regulatory authority from the Tarion new home warranty program service.
Bill Walker, the minister of government and consumer services, described Tarion as “broken” in a Feb. 21 news release. The government will create a new Home Construction Regulatory Authority with a new board and new mandate to create rules that have frustrated consumers, including large-scale condo cancellations and chronic maintenance problems.
“Really, the focus would be on those bad apples,” Walker told the Globe and Mail. “We’ll penalize them and almost try to squeeze them out of the marketplace.”
The splitting of regulatory power form the warranty program administration was originally introduced by the previous Liberal government, but it didn’t proclaim the changes before it lost power.
The government says it is following through on proposals to consider a multi-provider insurance model, which would allow competitors to offer warranties – ending Tarion’s monopoly on the new home/condo warranty market. “The analysis will include consultations with stakeholders in early 2019, including the insurance and new home building sectors, consumer groups, Tarion and our ministry partners,” the statement says. Alberta and BC allow third party insurers.
Among other changes, the government proposes:
- Legislative amendments to require Tarion to publicly disclose executive and board compensation and “move to a more balanced skills-based board compensation”;
- The planned Home Construction Regulatory Authority’s “first directors will be primarily focused on developing the necessary governance and operational infrastructure to administer a strengthened regulatory framework similar to other modern administrative authorities.”
Tarion has been requested to make changes to its addenda to agreements of purchase and sale for condominium buyers within the next 12 months to enhance disclosures for consumers about the risks of purchasing pre-construction condominiums. This would include matters that could cause a project to get cancelled, such as outstanding approvals, project financing, or restrictive covenants on title.
Other changes would include:
- Developing options to require developers to post information about their condominium development projects on their websites (e.g., information about outstanding approvals or other matters that could cause a project to get cancelled);
- Working with the Condominium Authority of Ontario to educate prospective buyers about the condominium purchase process; and
- Improving information collection on new home construction projects.
Many of the changes result from a 2016 review of Tarion by Justice Douglas Cunningham requested by the former Liberal government.
In 2017, 5,549 builders and vendors were registered with Tarion and that year 68,945 new homes (46 per cent of which were condo units) were enrolled in the warranty program.