New home buyers believe that their new home purchase is well protected
which administers the Ontario New Homes Warranties Act. Many critics
say that the consumers are not properly protected; instead Tarion is
protecting the builders.
Here are a couple of recent articles about Tarion.
Expanded Protection For Ontario’s New Home Buyers Coming In 2018
18 December 2017 (abridged)
TORONTO, ON – Ontarians hoping to take the leap into homeownership can
buy with added confidence thanks to expanded consumer protection
measures coming into force on January 1, 2018.
Condominium dwelling units
Coverage for condominium dwelling units will remain unchanged since
these units benefit from significant protection under the trust
provisions of the Condominium Act, which require all monies paid
towards the purchase price to be held in trust. Additionally, deposits
made for condominium purchases are protected up to $20,000 by Tarion.
For those looking to purchase converted condominiums, changes to the
Ontario New Home Warranties Program mean that their units and common
elements will now have warranty coverage. These developments, referred
to as “residential condominium conversion projects” or RCCPs, turn
existing buildings into condos that incorporate some of the existing
building’s more interesting features (e.g., large windows, framing,
brick walls) into the design.
RCCPs will benefit from the same statutory warranty coverage extended
to all condominium projects, including deposit protection, delayed
occupancy coverage, and the one, two and seven year warranties. There
is one exception; the first year warranty on work and materials
will not apply to pre-existing elements (e.g., a foundation or exterior
cladding). Under the new regulations, builders of condominium
conversion projects and vendors selling units in these projects must
also be registered with Tarion.
To learn more about the expanded protections, new home buyers are encouraged to visit Tarion.com
Ontario must do more to protect buyers of
12 June 2013
By: Rosario Marchese
Who protects new home buyers in Ontario?
If you said “the Ontario government,” you would be wrong. No, when
Ontarians make the largest purchase of their lives, their consumer
rights are protected by a private corporation called Tarion, which
administers the Ontario New Homes Warranties Act. If your new home has
a cracked foundation, leaky plumbing or an uneven floor, it is Tarion’s
job to hold the developer accountable.
“Tarion is run by the
same development industry it is supposed to regulate.”
There’s just one problem: Tarion is run by the same development
industry it is supposed to regulate.
Tarion’s bylaws state that eight of the 15 seats on the Tarion board
must be members of the Ontario Home Builders’ Association (OHBA), a
lobby group for the development industry. Since the New Homes
Warranties Act obliges all builders to register with Tarion, the
province gives this one lobby group monopoly control over all builders
and new home buyers in Ontario.
And judging by the regular complaints I receive, it is clear that
Tarion's public mandate takes second place to private interests. My
constituents have told me of complaints to Tarion about faulty HVAC
systems, broken condo elevators, inadequate soundproofing or leaks
through the walls. A true consumer protection agency would take action,
but my constituents have experienced apparent indifference from Tarion
or an attitude that clearly favours the developer over the consumer.
These anecdotal reports are backed up by years of investigation by the
consumer group Canadians for Properly Built Homes, as well as decades
of government reports dating back to 1986, when former Ontario
Ombudsman David Hill urged reforms to what was then known as the New
Home Warranty Program.
Since then, little has changed. Various auditors, ombudspersons and
consumer advocates keep saying the same thing: Tarion is not
accountable to the consumer.
Here's an interesting statistic: each year since 2010, Tarion has
collected more warranty enrollment fees than it did the year before.
Buyers are required by law to pay these fees to Tarion when they
purchase a new home, and they provide most of the corporation's revenue
(last year, developers contributed only 5 per cent of its funding).
But during this same period, Tarion paid out less money each year in
warranty claims than it did the year before.
Home sales are increasing year by year, but claim payouts are
decreasing year by year? What is going on?
Good questions, but Tarion is not obliged to answer to the
government or the public. Under current law, it is literally none of
In 2004, consumer minister Jim Watson acknowledged the public oversight
problem, and pledged to transform Tarion into an actual consumer
protection agency. His solution was to appoint five members to the
15-member board, four of whom would have a “background in representing
the interests of consumers.” The OHBA agreed to the change, and a
“win-win” was declared by all.
But the clever OHBA outsmarted the minister, because it turns out that
eight is bigger than five, and the minister’s bold policy did not
threaten the OHBA’s majority control of the Tarion board.
In a scathing report from 2008, the Ontario ombudsman warned the
government to stop pretending that it had meaningful oversight over
Tarion, or that its “consumer representatives” on the Tarion board
actually had the power to represent consumers.
Indeed, our consumer champions were forced to sign a confidentiality
agreement preventing them from even reporting back to the minister.
Not only that, the minister had no right to meeting minutes, auditors’
reports or strategic plans. And even though almost all of Tarion’s
funding came from Ontario’s new home buyers, via a mandate under
provincial law, the minister could not even review executive salaries
and expenses, or consultant fees to ensure consumers were getting value
for their money.
Tarion was, and is, a black hole.
In 2012, for the third time in as many years, I introduced a bill that
would update the New Homes Warranties Act and reform Tarion into an
actual consumer protection agency. My bill would reduce the minimum
number of developers on the Tarion board from eight to one, with at
least half the board having a background in consumer advocacy and two
members representing home owners.
My bill would also clarify that Tarion's mandate included “consumer
protection,” two words that appear nowhere in the New Homes Warranties
The first two times, the government blocked my bill. But last year, the
Ministry of Consumer Services finally agreed to a formal review.
The ministry’s review panel heard lots of complaints from home buyers
about Tarion, but these complaints were outside the narrow terms of
reference set by the ministry. The panel’s interim report said only
that these comments had been “duly noted” and forwarded to the
But which ministry is in charge of Tarion? None other than the Ministry
of Consumer Services, the same ministry overseeing the review. The
ministry could have broadened its scope, but instead chose to pass the
buck back to itself.
Why has the government been so reluctant to reform Tarion, despite all
the evidence that reform is desperately needed? Could it have something
to do with the fact that the construction industry is by far the
biggest contributor to political campaigns?
In the eight months leading up to the 2011 provincial election, the
construction industry donated $1.5 million to political campaigns. The
Progressive Conservative Party received $795,000 of this, and the
Liberals received $658,000 (the NDP received $29,000, less than two per
cent of the total).
You don't need a tinfoil hat to suspect a relationship between these
political contributions and the extraordinary powers the government
grants to the development lobby. The OHBA’s monopoly over the
province’s new home warranty program represents a clear conflict of
interest, and needs to end.
It’s time for Tarion to become the consumer protection agency Ontario's
new home buyers expect and deserve.
Rosario Marchese was the NDP MPP for Trinity-Spadina.
Homebuyers not getting full picture from
06 July 2013
By: Kenyon Wallace
The corporation created by the province to protect buyers of new homes
is keeping secret records of poor or incomplete work by builders, a
Star investigation has found.
Tarion Warranty Corp. has recovered nearly $30 million from developers
in the past five years for deficiences in new homes but won’t say who
those builders are or what the problems were.
That means consumers looking to buy a new home can’t find out from
Tarion which builders were on the hook when the warranty program —
following one of its key mandates — stepped in to complete work or fix
problems after homeowners complained.
In a series of responses to questions from the Star, Tarion said it
does not have to reveal the records because it already publishes a lot
of information online, including a database of licensed builders, a
list of developers who have had their licences revoked, and names of
those prosecuted for illegal building.
“Whether or not we’ve recovered money from a builder can be affected by
so many factors that it’s not a useful information tool for consumers,”
said Karen Mortfield, Tarion’s vice-president of stakeholder relations.
Here are three cases the Star found where buyers had deficiencies in
their new homes, yet consumers looking up the builders’ records on
Tarion’s online database would have no way of learning what the
• North Toronto luxury homebuilder JRC Developments Ltd. is the
subject of a $42,000 lawsuit launched by Tarion to recover money it
says it spent to correct construction deficiencies in a home. JRC
denies responsibility and is countersuing Tarion for $51,000 in damages.
• Builder Georgian Homes installed faulty heating, ventilation
air-conditioning systems in a downtown Toronto townhouse complex and
paid more than $50,000 in compensation to homeowners. Georgian says it
did not intentionally install faulty systems.
• Homebuilder Picture Homes Millenium installed an uneven garage
in Port Perry that became cracked, allowing water to seep in and form
puddles when it rained or snowed. The builder maintained, in an
interview with the Star, that the floor was built in accordance to
Tarion guidelines but nonetheless repaired the problem. An independent
engineering firm later recommended the floor be repaired again, so
Tarion offered the homeowners a cash settlement.
Tarion does not receive government funding, so it is not subject to
freedom-of-information laws or oversight by the Ontario ombudsman.
Likewise, the salaries of its CEO, chief operating officer, eight
vice-presidents, 17 directors (such as director of warranty services,
director of builder relations) and 30 managers are not made public. The
corporation reported that it paid out nearly $24 million in salaries
and benefits last year.
The majority of Tarion’s revenue of $60 million in 2012 came from home
warranty enrolment fees — between $385 and $1,500 depending on the
price of the home — that builders sometimes pass on to purchasers.
New-homeowner advocate Karen Somerville says Tarion should be more
transparent because the purchase of a home is the largest investment
most people make.
“Consumers need reliable and complete information about a builder’s
track record in order to make an informed purchase,” said Somerville,
president ofCanadians for Properly Built Homes, a national
non-profit consumer-protection organization.
"they found more than
140 construction defects — including more than 50 Ontario Building Code
Somerville started the organization in 2004 after she and her husband
say they found more than 140 construction defects — including more than
50 Ontario Building Code violations — in their new Ottawa-area home.
For several years, the group has been lobbying the provincial
government to make Tarion more transparent and update the 37-year-old
legislation it administers.
“With today’s technology and the information Tarion has accumulated
about the builders’ performance, we do not understand why this problem
continues,” Somerville said.
When a builder does not finish a job or fix a problem covered by
warranty, Tarion will step in and complete the work or offer a
settlement to the homeowner. Tarion will then invoice the builder to
recover the cost of fixing the problem. Since 2008, Tarion has
recovered nearly $30 million from builders, according to its latest
But Tarion does not make the names of these builders public or disclose
how many are involved. Tarion’s mandate, in part, as stated on its
website, is to “protect consumers when builders fail to fulfill their
Tarion does maintain an online database of licensed builders, which
includes the number of times its inspectors found incomplete work and
any compensation paid to homeowners, but it does not include specific
information about the problems.
As a result, consumers have no way of knowing whether a problem was
cosmetic, such as a poor paint job, or more serious, such as a faulty
In addition, the database lists only new homes by location going back
three years, meaning consumers can’t get a full picture of where a
developer has built homes in the past.
The corporation acknowledges its public builder profiles do not provide
a complete picture of customer-service records.
“We’re advocating that
you do a lot more research in terms of picking your builder,...”
“Our records, I think, are an indication. They’re not a perfect
indication,” Tarion’s president and CEO, Howard Bogach, said in an
interview with the Star. “We’re advocating that you do a lot more
research in terms of picking your builder, doing references, talking to
other people who have bought homes from those people.”
Bogach said posting more information on Tarion’s website was “something
we can do a little more research with and talk about.”
Alex and Sharon Patinios had always wanted to build their own home and
saved for more than 10 years to do so.
In 2007, they hired JRC Developments to build their home on a lot they
purchased in North Toronto. Construction went seemingly according to
plan and, in April 2008, the Patinioses and their three children moved
Tarion’s statutory warranty process allows new homeowners to submit
within the first 30 days of possession a list of deficiencies they
believe should be covered by the warranty. Similar lists can also be
submitted on the first and second anniversaries of possession.
For their 30-day warranty claim, the Patinioses noted more than 200
items they regarded as deficiencies, including a crack in a front
window, incomplete painting throughout the house and a missing exhaust
fan in a bathroom.
They say their builder, JRC, was initially amenable to addressing the
deficiencies and came to the house to make repairs over the course of
But after 120 days, the time builders are given by Tarion to correct
problems, Alex Patinios said it became clear to him JRC wasn’t going to
The Patinioses requested an inspection, after which Tarion said 46
items were warranted.
The family challenged Tarion’s assessments at the Licence Appeal
Tribunal, a provincial forum created to hear appeals of licensing
decisions in government-regulated industries.
The Patinioses ended up making claims for what they believed were a
further 200 deficiencies on their one-year and two-year anniversaries
In the end, Tarion settled with the Patinioses for $35,520. Alex
Patinios says he spent in excess of $50,000 in lawyer fees over the
course of their ordeal.
“Many major deficient items were fixed or compensated only when we
challenged Tarion at great cost to us in time and money,” said
Patinios. “In all our experiences dealing with Tarion, it appears to us
to be a system designed by builders for the protection of builders.”
Tarion says it is “puzzled by Mr. Patinios’s combative attitude toward
Mortfield said that all of the Patinioses’ warranty items were either
fixed or paid out in a cash settlement.
“The vast majority of homeowners would be delighted by that outcome,”
Tarion has filed a lawsuit against JRC in an effort to recover more
than $42,000 for losses it incurred “in respect of the failure of the
builder to perform certain obligations.”
The suit alleges that JRC “failed to ensure that reasonable skill and
diligence was exercised in the construction of the home” and that JRC
has not reimbursed Tarion.
JRC denies the allegations in its statement of defence and is
countersuing Tarion for $51,000 in damages. JRC argues that because the
Patinioses supplied much of the interior finishes and hired their own
bricklayer, among other things, it did not build the entire home or
supply all the materials, so is only responsible for portions that it
JRC owner Ross Cammalleri declined to comment when contacted numerous
times by the Star.
Mortfield would not discuss the lawsuit and said that collection
litigation “is a matter that should not be tried in the press or the
Internet but rather should be permitted the due process of the courts.”
None of the allegations has been proven in court.
Despite the settlements paid to the Patinioses and the fact that Tarion
is pursuing JRC for money it says it’s owed, there is nothing about the
deficiencies on Tarion’s profile for JRC.
Tarion was created by the province in 1976 to administer the Ontario
New Home Warranties Plan Act.
Buyers of new homes and condominiums in Ontario are entitled to
Tarion’s warranty program that protects against loss of deposits,
delays in occupancy, defects in work and material, and major structural
problems, among other things. Tarion also regulates new homebuilders,
sets construction performance guidelines and prosecutes illegal
Critics of the warranty program have long called for Tarion to come
under the jurisdiction of the Ontario ombudsman.
Former ombudsman Dr. Daniel Hill first suggested just that in 1986. The
suggestion wasn’t taken up.
The current ombudsman, Andre Marin, used Tarion as an example last year
while imploring MPPs not to let his office lose oversight of certain
provincial agencies. Since 2007, his office has received 294 complaints
about Tarion even though the corporation doesn’t fall under his
“History has taught us that these organizations can be fraught with
problems because their independence tells them that they’re really not
governmental and they can act as if they’re not governmental,” Marin
told the Standing Committee on Finance and Economic Affairs.
Critics also point out that Tarion’s board is dominated by the
construction industry and argue that its composition should be changed
to include more consumer advocates.
Tarion board chair Harry Herskowitz, a development lawyer, says there’s
nothing unusual with the board’s makeup, given that boards of other
regulatory organizations, such as the College of Physicians and
Surgeons of Ontario and the Law Society of Upper Canada, also have a
majority of members from their respective professions.
“We have to balance
consumer protection against commercial reality...”
“The best people to govern or licence or regulate or oversee or manage
how the industry is doing are builders themselves because they know
what it’s like, they know what the higher standards should be,” said
Herskowitz. “We have to balance consumer protection against commercial
reality and we try to do that but always in the best interest of the
Former Tarion CEO Greg Gee says it was a challenge to get approvals
from the board for consumer initiatives and funding during his tenure.
“If you’re a consumer organization, how can you have a 35-year history
of a board that’s dominated by people that you’re licensed to
administer and control? Well, that’s one of the conundrums that is at
the root of Tarion,” said Gee, who was at the helm of the corporation
between 2001 and 2008.
Consumer Services Minister Tracy MacCharles told the Star she has met
with Tarion’s leadership and doesn’t see significant problems with the
organization or the need for big changes.
“The system is operating relatively well — it is not perfect — but it
is also not broken,” MacCharles said.
In December 2007, purchasers of a new townhome development, Watermark
Lofts, on Toronto’s Gerrard Street, started moving in, only to
encounter major problems with their heating, ventilation and air
conditioning (HVAC) systems.
But consumers hoping to learn about the track record of the builder,
Watermark Developments Ltd., won’t find it on Tarion’s online database.
That’s because Tarion lists only builders that have current licences —
Watermark’s licence expired in 2009.
Tarion told the Star Watermark is a division of Georgian Homes. The
Star could not find records of the Watermark Lofts deficiencies under
Georgian’s public profile on Tarion’s website.
Bev Craddock, one of the townhome owners at Watermark Lofts who
experienced problems, wonders how consumers are supposed to know that
her builder is a division of Georgian Homes if there is nothing on
Tarion’s website to indicate that.
Just a day after taking possession of her new home, Craddock discovered
she had no heat. A repair was made to her HVAC system but the lack of
heat proved to be just the beginning of her problems.
During the winter, her upstairs bedroom would become sweltering while
rooms on her lower floors would stay cold. She also had trouble heating
her kitchen, living room and dining room to 22 C, as required by the
Ontario Building Code.
“It was like living in multiple climate zones,” said Craddock, 54.
Despite numerous attempts to fix the problem by contractors for the
builder, Craddock noted the issue on her one-year warranty form. A
Tarion inspector — who had no training in HVAC systems — denied
When Craddock appealed to the Licence Appeal Tribunal, Tarion conducted
another inspection and found a temperature discrepancy of 14 degrees
between the upper and lower floors, and agreed the complaint had merit.
Using her own money, Craddock hired an HVAC expert who suggested the
system could be repaired for $60,000. Another expert hired by Tarion
said the work could be completed for $20,000.
“The owner’s expert was recommending extremely invasive, extensive
repairs that would have gone well beyond anything to do with the
claim,” said Tarion’s Mortfield.
Tarion argued that because Craddock did not specifically mention
problems with the air conditioning, any repairs should be limited to
addressing heating issues.
The tribunal disagreed and said the system as a whole should be fixed.
In the end, the tribunal awarded Craddock $40,000.
“In some cases we don’t get it right and we feel we let Bev Craddock
down,” said Mortfield. “We should have been faster in finding a
solution and we could have been more empathetic, understanding that she
lived with a horrible situation for a very long time.”
Craddock’s next door neighbour, Cathy Pascuttini, experienced similar
problems with her HVAC system and settled with Tarion for $35,500 last
summer — more than four years after moving in.
“We strongly feel and believe Tarion is not there to protect the rights
of homeowners,” Pascuttini said.
Georgian Homes president Anthony Maida said his company is “very
cognizant that the purchasers had a problem and the equipment failed
and we did our best to fix it.”
Maida stressed that builders rely on the expertise of contractors who
install electric, heating and plumbing systems. He said Georgian Homes
was told by Tarion to pay for half of Craddock’s award and all of
“The builder has the ultimate responsibility, but he has all these,
I’ll use the word soldiers, that he hires and he’s relying on them,
The company is now suing the HVAC system’s designer, manufacturer,
distributor and installer for $2 million.
About a year after moving in to their new home in Port Perry, Ray and
Sharon Smith noticed cracks in their garage floor that allowed water to
pool when it rained or snowed. When the temperature dropped, the couple
says the puddle would freeze, creating a slipping hazard.
They informed Tarion of the problem on their one-year warranty claim
form and say they were told the problem was not warrantable but that
they should work with their builder, Picture Homes Millenium, to
rectify the issue.
The couple says two repair attempts by the builder failed, so they
approached Tarion but were told that because they did not request an
inspection after submitting their one-year warranty claim on the garage
floor, their file was closed.
“It was intensely frustrating,” said Ray Smith, 54.
After the Smiths sent several complaint letters to Tarion, the
corporation agreed to have an engineering firm inspect the garage
floor. The firm concluded the floor was constructed on loose soil and
recommended the concrete slab either be replaced or raised.
Finally, nearly three years after taking possession, the Smiths settled
with Tarion for $7,000, which included compensation for scratches in
their patio door glass. The Smiths then hired their own contractor
using this money to fix their garage floor.
Lorne Stein, vice-president of sales and marketing at Picture Homes
Millenium, told the Star that “minor unevenness in garage floors occurs
“In our view, there was no necessity for the homeowner to replace the
garage floor. We met with two engineers retained by Tarion and a Tarion
representative in the winter of 2008, at which time the engineers
concluded the floor was acceptable and we did not hear anything further
on this matter.”
Stein said his company has no record of being advised of any payment
made to the homeowners by Tarion, nor any records of problems with the
Smiths’ patio doors.
“We feel we handled the garage-floor issue properly and in a manner
consistent with our advertising.”
Anyone looking up Picture Homes Millenium’s profile on the Tarion
website would find a nearly flawless record. There is also no record of
the builder having built homes in Port Perry, because Tarion only lists
homes by location going back three years. (The development was finished
Tarion says the settlement offered to the Smiths is not reflected on
the builder’s profile because “the items were not warranted and the
payment was a goodwill gesture made by Tarion.”
Smith says he thinks calling the payment a “goodwill gesture” masks any
fault the builder may have.
“Whether or not the settlements Tarion pays are recoverable from the
builder, a new homebuyer would still want to know a builder’s record as
reflected by the number and costs of defects that had to be corrected.”