Bad Home Builders Could Be Penalized Up to 50,000 Under New Regulations in Ontario

Construction workers build new homes in a development in Ottawa in this file photo. Sean Kilpatrick/The Canadian Press

Consumers who purchase newly constructed homes in Ontario will be further protected with heavy fines up to $50,000 that can be levied against home builders who breach licensing or ethical rules, under provincial regulations that came into effect as of Wednesday.

The Home Construction Regulatory Authority (HCRA), in its second year of operating, has been given the legislative authority as of Feb. 1 to impose hefty administrative penalties on home builders or vendors in the province of Ontario that “breach their legal and ethical obligations.”

Tess Lin, spokesperson for the HCRA, told The Epoch Times that there are approximately 6,500 licenses issued to individuals and companies who build and sell new homes in Ontario.

In a news release issued Feb. 1, the HCRA said that changes to the province’s New Home Construction Licensing Act, 2017 (NHCLA), have allowed financial penalties (similar to fines) to be added as one of the existing enforcement tools of the organization, which also include revoking or imposing conditions on a license.

The penalties can be used to offer funds to negatively impacted consumers, depending on the circumstances.

“The HCRA may consider whether a licensee benefited financially from breaking the law and, if so, an additional penalty may be applied reflecting the amount of the benefit, which could be passed on to the impacted consumers,” it said.

“The HCRA is serious about holding new home builders and vendors accountable for their behaviour,” Wendy Moir, the HCRA’s chief executive officer and registrar, said in the news release.

Moir said the 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.”

An individual or company operating illegally, without being licensed, could be penalized up to $50,000 per occurrence. Moir called this “a first for the industry.”

She said it will help ensure people purchasing a brand new home do so in a “fair and safe marketplace.”

The HCRA has issued multiple advisories to license holders in the province, reviewing conduct expectations and the consequences for not following the rules in place to protect new homeowners.

Big Purchase

Noting that buying a home was one of “the biggest purchases” in someone’s life, Kaleed Rasheed, Ontario minister of public and business service delivery, said Ontario was the first jurisdiction in Canada to compensate consumers “harmed by unethical and illegal behavior” on the part of any “bad actors” among new home builders and vendors.

The HCRA said in November 2022 that it had been “actively” investigating consumer complaints regarding price escalations and terminations of purchase agreements.

That month, the HCRA put license conditions on one company, ADI Morgan Developments (Lakeshore) Inc., after complaints from consumers about cancelled contracts and unreturned deposits.

As a term of the resolution, the home builder was required to pay almost $2.6 million to 141 purchasers as a penalty, in addition to returning customer deposits that were not paid on time.

The amount ADI Lakeshore was ordered to pay also included an additional $60,000 in penalties, to be paid once the new monetary penalty legislation came into effect.

“By requiring ADI Lakeshore to pay this money to the purchasers, we are ensuring that the builder did not benefit from breaching their licence requirements,” said Moir.

The home builder also had conditions put on its license, forbidding the company from cancelling any agreements, “unless the purchaser requests the cancellation first or is in default.”