Big Changes to Tarion and Warranties are Coming!

stencil.default (2)The Strengthening Protection for Ontario Consumers Act, 2017, which is also known as “Bill 166”, received royal assent on December 14, 2017. According to the press release by the Ontario government, Bill 166 was designed to “build a fairer, safer and more informed marketplace with stronger rules for buying event tickets and travel services, and purchasing, leasing or selling real estate, including newly built homes.” The bill amends or repeals 13 existing statutes like the Ontario New Home Warranties Plan ActReal Estate and Business Brokers Act, and Travel Industry Act, and enacts three new statutes: the Ticket Sales Act, New Home Construction Licensing Act, 2017, and Protection for Owners and Purchasers of New Homes Act, 2017. 

Of significant note is that the Ontario New Home Warranties Plan Act (the “ONHWPA”) will be repealed at a date to be determined by proclamation and replaced with the New Home Construction Licensing Act, 2017 (the “Licensing Act), and Protection for Owners and Purchasers of New Homes Act, 2017 (the “Protection Act”). In essence, the role of Tarion will be split into two parts. The Licensing Act will be responsible for designating a not-for-profit corporation to oversee the regulation of new home builders and vendors. The Protection Act will allow the government to designate a not-for-profit corporation to be the warranty authority. The date that the changes come into force is not yet known.

Some of the changes are in force now, such as:

  1. Increased deposit protection for home buyers. For non-condominiums, the increase to deposit coverage will be 10% of the purchase price (to a maximum of $100,000). The previous limit was $40,000.00. Unfortunately, the deposit coverage for condominium units will NOT change. The rationale is that the Condominium Act, 1998, provides adequate protection for condo purchasers. There is also increased protection for other payments (i.e. upgrades).
  2. New warranty protection for residential condominium conversion projects. These projects will have the same coverage as other residential condominiums, except for the first year warranty for work and materials on the pre-existing elements.

In addition to the above changes, Tarion recently changed the enrolment fees for new residential builds. You can see the chart on the Tarion website: https://www.tarion.com/builders/building-homes-condominiums/warranty-enrolment-fees

A final note on the changes to the Real Estate and Business Brokers Act, 2002. The amendments will increase the maximum fine that the discipline committee can impose if the committee finds that a licensee has failed to comply with the code of ethics. It also allows the government to pass new regulations to specify circumstances in which licensees are prohibited from representing more than one party in a transaction.