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Tarion warranty payouts to be fast-tracked under new legislation

Proposed legislation will save home owners from red tape when they have problems with home builders.

Tracy MacCharles, Minister of Government and Consumer Services, says the proposed legislation would clarify the dispute resolution process.

Bernard Weil / Torstar News Service Order this photo

Tracy MacCharles, Minister of Government and Consumer Services, says the proposed legislation would clarify the dispute resolution process.

Buyers of new homes in Ontario will have a faster track to warranty payouts for builder defects under a massive overhaul of the Tarion home warranty system, the province has announced.

Under legislation being tabled at Queen’s Park today, buyers who find defects in their newly-built homes will no longer be forced to prove the cause of the problems to obtain warranty coverage, simply show that the defects exist.

“This has been a persistent issue that consumers, stakeholder and the media have been vocal about,” said Tracy MacCharles, Minister of Government and Consumer Services, at a press conference at Queen’s Park Thursday morning. “If passed, the proposed legislation would clarify the dispute resolution process to make it easier and fairer for new home owners.”

An ongoing Star investigation has found buyers who have encountered defects in their new homes are stymied by onerous requirements to prove the cause of the deficiencies in order to successfully make a warranty claim. Some new homeowners the Star spoke to were forced to hire engineers and heating and ventilation specialists in an effort to prove problems with their furnaces — a process they complained was lengthy and costly.

The legislation revamps the way the new home warranty program in Ontario works by stripping Tarion Warranty Corporation of its role as regulator of new homebuilders. Under the Liberals’ plan, a new “administrative authority” will be created to regulate builders and vendors, while Tarion will continue to administer warranty claims.

The measures address what MacCharles calls “conflict of interest concerns” with the multiple roles Tarion currently plays as regulator, warranty provider and adjudicator in disputes between buyers and builders. Tarion, a private non-profit corporation, was created by the province in 1976 to protect new home buyers and regulate builders.

“Separating the administrator of the new home warranty program from the new home builder and vendor regulator would help to increase consumer confidence in the warranty program that protects their home, which represents one of the most important investments a consumer can make,” the minister said.

Also in the legislation are measures for up-to-date protections for deposits on new homes and condos. In Ontario, the maximum deposit protection for a new home is $40,000 while the condo deposit protection is just $20,000 — amounts that do not reflect current home prices, especially in the GTA. The government says it will ask Tarion to come up with deposit protection amounts more aligned with today’s real estate market.

The plans have been informed by recommendations made by former Associate Chief Justice J. Douglas Cunningham, who was appointed by the province in late 2015 to conduct an independent review of the Ontario New Home Warranties Plan Act and Tarion following a series of Star stories. Opposition parties have also called for greater oversight.

In March 2017, Cunningham produced a lengthy report consisting of 37 recommendations for improving the system, including: setting out the minimum standards for mandatory warranty protections in legislation; creating a separate entity to regulate builders and vendors; improving the transparency of information available on Tarion’s online builder directory; and making the new regulator subject to transparency and oversight provisions similar to those in place for other administrative authorities.

Tarion is unique when it comes to the province’s administrative authorities in that it has the power to enact its own regulations, such as those governing builder performance and warranty terms.

In her remarks, MacCharles said both newly-created administrative authorities would be subject to “stronger oversight, transparency, governance and accountability” similar to Ontario’s other modern authorities, such as the Electrical Safety Authority, the Technical Standards and Safety Authority and the Travel Industry Council of Ontario.

“If passed, the proposed legislation would also give the government a much greater role in rule making and setting standards,” she said.

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