Tarion and the HCRA – The First Six Months

Author: Hannah Johnston, Summer Student

Tarion Warranty Corporation (“Tarion”) was established in 1976 under the Ontario New Home Warranties Plan Act to administer the province’s home warranty program. Six months ago, Tarion’s structure and process were updated. The Home Construction Regulatory Authority (“HCRA”) launched on February 1, 2021. The HCRA is a separate regulator for new home builders and vendors, and Tarion will now focus solely on administering warranties and protections for the purchasers of new homes. Tarion transferred its authority over the registration and licencing of builders to the HCRA, under the New Home Construction Licencing Act. Builders and vendors in good standing with Tarion automatically had their Tarion registration numbers transferred to their HCRA licences.

Recent Updates:

The changes that came into force on February 1, 2021 include a revised fee schedule, where a $145 plus HST “Regulatory Oversight Fee” will be charged by the HCRA along with the existing new home enrollment fees already charged by Tarion. Builders must also display their HCRA licence is more places than before and be licenced with the HCRA (instead of registered with Tarion) before enrolling any homes. Tarion continues to manage warranty claims, handle underwriting of vendors and builders, and conduct pre-possession risk-based inspections. The HCRA has taken over home buyer concerns about builder/vendor conduct and also manages the Ontario Builder Directory (“OBD”). Tarion remains involved at the beginning of the new-home process, and will still require that builders and vendors obtain a completed Qualification for Enrollment application before selling or beginning construction and will need to be issued the notice to proceed. One other notable difference is a change to the forms to be included with every Agreement of Purchase and Sale (“APS”) for a pre-construction or new home signed on or after February 1, 2021. Each APS must have the following:

  1. Residential condominium units (for standard and phased) must have the HCRA’s Information For Buyers of Pre-Construction Condominium Homes form attached at the front of each APS;
  2. all homes (freehold and condominium) must have the appropriate version of the new Addendum included; and
  3. all homes (freehold and condominium) must have the appropriate version of Tarion’s new Warranty Information Sheet attached to the Addendum.

Legal Issues at the Licence Appeal Tribunal

In the past six months, the HCRA has been to the Ontario Licence Appeal Tribunal (“LAT”) three times. These LAT cases dealt with whether a builder or vendor should be able to extend how long they could file a Notice of Appeal from the HCRA’s proposed revocation of their licences. The licence revocation process requires the HCRA’s Registrar to serve notice of its intention to revoke a licence, then the builder has 15 days to request a hearing with the LAT. If no hearing is requested, then the HCRA can proceed to revoke the licence, unless the licensee can show justice demands an extension.

In 7853742 Canada Inc. o/a Mapleview Homes v. Registrar, Home Construction Regulatory Authority, the builder’s request for an extension to the Notice of Appeal period was denied because the Notice referred to outstanding construction liens, the builder had insufficient equity and failed to provide a satisfactory explanation of its financial circumstances. The appellant also applied three and a half months after being notified, which is far beyond the statutory 15-day appeal period. No extension was granted in Superior Construction – Luxury Homes Inc. v. Registrar, Home Construction Regulatory Authority either.

The builder was informed he needed to sign and send back the new conditions for registration imposed by Tarion by October 2020, but he waited until Tarion transferred authority to the HCRA. The LAT here said this was a “calculated and conscious decision” not to apply to extend the Notice of Appeal on time. A Notice of Appeal was not filed within the statutory 15-day period in Diamond Luxury Builders Inc. v. Registrar, Home Construction Regulatory Authority but an extension was granted due to special circumstances, including the builder contracting COVID-19, which lead the LAT to say it would be an injustice to not grant an extension and allow a hearing. The HCRA is still a rather new entity, the industry is still adjusting to the new division of responsibilities between Tarion and the HCRA.

More information on the responsibilities of each entity can be found on the Tarion website.