The Ottawa lawyer who chairs the private corporation that protects buyers of new homes in Ontario says the organization has boosted consumer protection dramatically in his 10 years on the board, but more work still needs to be done.
Chris Spiteri, who became the first local person to head the board of Tarion Warranty Corporation in more than 25 years when he was elected last May, said homebuyers used to complain that the non-profit agency was biased in favour of builders when arbitrating disputes.
“I don’t hear (those complaints) anymore,” Mr. Spiteri, a partner at Spiteri & Ursulak, said in a recent interview with OBJ. “In some ways, I think maybe we’re a little too humble in getting that message out.”
Over the past decade, Tarion has boosted protection against problems such as major structural defects from $150,000 to $300,000 and has extended warranties from just two years to as much as seven, he said. The agency has also launched an external review of its dispute resolution mechanism to ensure it’s as fair as possible, he noted, adding it successfully resolves such cases “almost 100 per cent of the time.”
Mr. Spiteri, whose one-year term as chair ends in April, said the corporation is now focused on cracking down on illegal building, which he calls a “real problem in the province.”
All dwellings built for sale in Ontario must be constructed by builders who are registered with Tarion and have proven they have proper expertise and the financial resources to protect buyers’ deposits. The only exceptions are rental properties, homes built by the owners themselves and seasonal housing such as cottages.
Mr. Spiteri said buyers of illegally built homes can be on the hook for repair costs due to shoddy workmanship and can be liable if the builder’s employees are injured on the job.
“For new homebuyers, it’s a real problem because they’re unaware of what warranty rights are extended to them,” he said. “There’s a series of impacts that new homebuyers aren’t aware of.”
He said Tarion will be vetting applications for new building permits much more rigorously in the future to ensure builders have the proper paperwork. In the past, he said, violations were often brought to the warranty company’s attention only after the fact.
“If we can take this step forward to ensure that new homes are predominantly done legally by legally registered builders, I think we have served new homebuyers tenfold over,” Mr. Spiteri said. “This is the biggest initiative to protect consumers that I’ve seen Tarion take.”
But an NDP MPP who has tabled a private member’s bill that would give the province’s auditor general and ombudsman the power to investigate Tarion says he doesn’t think illegal building is a major worry for most consumers.
“It may be an issue … and I support that initiative, but that’s the concern that I’m hearing at the doors,” said Jagmeet Singh, adding he hears far more complaints about legitimate builders who dodge their responsibility to homebuyers. “People tell me, ‘Hey, we bought from this builder and the builder’s not fixing and Tarion’s not paying up.’”
Mr. Singh’s bill, entitled the Tarion Accountability and Oversight Act, would also force the corporation to ensure that employees who earn more than $100,000 a year are included on the provincial “sunshine list” and make its bylaws subject to government approval.
Tarion, which was created by the province in the 1970s to oversee the Ontario New Home Warranties Plan Act, is funded mainly through enrolment fees of up to $1,600 per home that are usually passed on to buyers.
Because the corporation doesn’t receive direct government funding, it isn’t subject to provincial oversight. But Mr. Singh argues the enrolment fees amount to a de facto tax on homebuyers.
“Because the government has basically said, ‘You are the only warranty provider for new homes,’ in effect they’ve created a situation where everyone who buys a new home in Ontario has to give money to Tarion,” he said. “If they’re forcing everyone to pay Tarion, we want to know how the money’s being used and what the salaries are.”
Mr. Spiteri said he’s proud of Tarion’s record when it comes to protecting consumers. Each year, he noted, only a handful of disputes between buyers and builders end up at the provincial Licence Appeal Tribunal, the arbitrator of last resort.
“That’s a remarkable number,” he said. “By the time it gets to that point, Tarion has already gone to great lengths to bring about a resolution.”