Unethical Homebuilders in Ontario Will Now Face Much Steeper Fines

February 01, 2023

Real Estate News

RYPM

Be warned: Ontario homebuilders will now face steep fees for unethical or illegal behaviour.

Starting today, the Home Construction Regulatory Authority (HCRA) — a homebuilding watchdog formed February 2021 — may now impose administrative penalties on the province’s homebuilders or vendors who breach their legal and ethical obligations.

The new regulation adds administrative penalties (a financial penalty similar to a fine) that can run as high as $50K per occurrence to the HCRA’s existing enforcement tool belt, which also includes revoking or imposing conditions on a licence. The changes were first proposed in the fall following a spike in Ontario homebuyers dealing with builders unlawfully cancelling pre-construction projects or terminating purchase agreements. Previously, penalties were capped at $25K.

“The HCRA is serious about holding new home builders and vendors accountable for their behaviour,” says Wendy Moir, the HCRA’s Chief Executive Officer and Registrar in a press release. “These penalties are not just a cost of doing business. This is a clear message and reminder to the industry that unethical conduct and violations of the rules will not be tolerated.”

The HCRA highlights the increased protections that the new penalties will offer to homebuyers. Thanks to changes in the New Home Construction Licensing Act (NHCLA), the organization will “use the proceeds from the new administrative penalties to provide funds to negatively impacted consumers, depending on the circumstances.” The HCRA adds that it will consider whether a homebuilder gained financially from breaking the law, and, if so, an additional penalty may be applied that reflects the amount of the benefit — something that could be passed on to the impacted consumers.

“Hard-working Ontarians deserve to be treated fairly when making one of the biggest purchases of their lives, a new home,” said Kaleed Rasheed, Minister of Public and Business Service Delivery. “Ontario is the first jurisdiction in Canada to provide such funds to consumers harmed by unethical and illegal behaviour of new home builders and vendors. With expanded enforcement tools, the HCRA has additional tools to crack down on bad actors and take a robust approach to better protect consumers.”

The HCRA says that penalties can also be imposed on people or companies who operate without a licence, which is clearly illegal.

“These penalties — up to $50,000 per occurrence, depending on the contravention — are a first for the industry and will support an enhanced, fair and safe marketplace,” Moir says. “They will support the HCRA in quickly taking action against illegal and unethical behaviour, both protecting consumers and ensuring a level playing field in the industry.”

The HCRA will take steps to educate homebuilders to ensure they’re in compliance with the requirements under the NHCLA and Code of Ethics. The HCRA says it has already issued several advisories to licensees, offering a friendly reminder about conduct requirements and consequences for not following the rules.

Wanting to also offer more resources to help consumers, the HCRA has enhanced the Ontario Builder Directory with additional disclosures on builders, including information on condominium contract terminations.

“Over the past two years, the HCRA has enhanced consumer protection in Ontario, and is holding new home builders and vendors accountable,” Moir says. “With support from the government such as the new enforcement tools, the HCRA will continue to improve and raise the bar for the new home building industry in Ontario.”