The following is a reprint from a Toronto Sun article written by the President and CEO of the Tarion Warranty Corp. that explains the regulations in place for building new homes in Ontario. These regulations may apply to a custom home you're thinking of buying. If the regulations haven't been followed, the home may be deemed "illegal". Your Realtor can provide some guidance, but it's always best to discuss such a purchase with your real estate lawyer before signing an Agreement of Purchase and Sale.
"Illegal building can lead to substandard homes and potential liability issues for home buyers.
One of my recent columns discussed how your lawyer and real estate agent can help protect you against buying an illegally built home. I often receive questions from people wondering what exactly illegal building is and what it means to the average home buyer, so I’d like to take this opportunity to tell you what every new home buyer needs to know about illegal building.
Let’s get the legal definitions out of the way first.There are two types of illegal building according to the Ontario Home Warranties Plan Act. The first is when a builder who is not licensed by Tarion builds or sells a new home. The second is when a builder sells a new home without having enrolled it with Tarion. Even licensed builders can be charged with this type of illegal building if they don’t enroll a home in Tarion’s warranty program.
Now that you know what illegal building is, you might be wondering how it could impact you as a home buyer. The process by which builders in Ontario become licensed is a rigorous one.
Before being licensed by Tarion, all prospective home builders are required to attend a builder orientation session, successfully complete a technical evaluation based on the Ontario Building Code and undergo a financial viability and business competency analysis. We believe that your home — likely the largest financial transaction you will ever make — should be built by someone who has the necessary skills and business competencies.
When something does go wrong, Tarion is here to help. Often, buyers of illegally built homes are left living in substandard conditions, without assistance from the builder or knowledge of the warranty protection they are entitled to. By not being made aware of the warranty they are entitled to, buyers of illegally built homes may end up missing out on warranty coverage because they file their claims too late.
Tarion investigators often find many components haven’t been built to meet the requirement of the Ontario Building Code. In one of Tarion’s most recent convictions for illegal building, the home was built with an undersized and improperly installed HVAC system.
The system wasn’t capable of adequately heating the home and the water which it used to distribute the heat was plumbed through the same lines as the drinking water — raising health and safety concerns. Tarion was able to work with the homeowners to provide the warranty coverage that should have been in place on the home and make the home safe and livable. You might want to consider that if a builder has failed to become licensed to build and sell new homes or hasn’t enrolled a new home, they may be less likely to follow other laws and statutes like Ontario’s Workplace Safety and Insurance Act and the Occupational Health and Safety Act.
Ontario’s custom-built home market is very strong and that means Tarion’s enforcement group deals with custom homes more often than any other type of illegally built home. Illegal builders who skirt the law may be more tempted to skirt Workplace Safety Insurance Board requirements, which could leave homeowners open to potential liability in civil proceedings.
Liability under the Occupational Health and Safety Act (OHSA) can also be a concern. Builders who aren’t active in overseeing the day-to-day construction of a house can leave home buyers pulling double duty to ensure that work is completed. A Richmond Hill area homeowner was fined $20,000 by the Ministry of Labour for a health and safety violation that led to the death of a carpenter working on his home.
The OHSA requires one person to be designated as the constructor — the party with the greatest degree of control over the construction project. In this case the judge found that the homeowner was overseeing the construction and became the constructor. Home buyers should always ensure that their builder is licensed, responsible for overseeing work on-site and ensuring safety requirements are being met.
So what can you do about illegal building? Before entering into any type of purchase agreement, visit Tarion’s Licensed Builder Directory at www.tarion.com and ensure that your builder is licensed to build in Ontario. Don’t be swayed by builders who claim that they have a special exemption or that you don’t need a Tarion warranty because they offer their own. Being licensed and providing a Tarion Warranty isn’t optional — it’s the law!
If you have any doubts about whether your builder is licensed, contact Tarion’s enforcement team at 1-800- 786-6497 or send an email to email@example.com. — Howard Bogach is president and CEO of Tarion Warranty Corp. His column appears the first weekend of every month. Published by The Toronto Sun, February 3, 2013"