The Home Construction Regulatory Authority: A new regime for licensing and regulating homebuilders

6 minute read
31 March 2021


Effective February 1, 2021, the Home Construction Regulatory Authority (the "HCRA") began licensing and regulating builders and vendors as designated under the New Home Construction Licensing Act, 2017 (the "NHCLA"). This change shifts the responsibility of licencing, regulation and the complaints process from the Tarion Warranty Corporation ("Tarion") to the HCRA, which will now have a much broader authority than what was previously seen under the Tarion regime.

What does this mean for builders?

For builders that are already registered with Tarion, their license will automatically be transitioned under the HCRA without an additional application requirement. For new applicants, the process will commence with the HCRA and include the new requirement of a criminal record check.

Effective February 1, 2021, Tarion will be lowering home enrolment fees by $55 per enrolment, which will reduce the average enrollment from $1,080 to $1,025. Additionally, in partnership with the HCRA, Tarion is proposing to collect the HCRA Regulatory Oversight Fee, on behalf of the HCRA at the time the builder enrols the home with Tarion. This will allow Tarion and the HCRA to reduce the regulatory burden on builders, leveraging Tarion's existing enrolment fee process to collect both clearly identified fees and provide builders with a "one window approach" that would satisfy the enrolment-related process requirements for both Tarion and the HCRA. An updated Home Enrolment Fee Schedule can be found on Tarion's web site and HCRA's licensing fees on the HCRA's web site. HCRA will charge a Regulatory Oversight Fee of $145 plus HST, per home. This fee will be collected by Tarion on enrollment of a home in the warranty program, and remitted to the HCRA.

The HCRA has also implemented a complaints process. Finally, disclosure obligations and addendum to agreements of purchase and sale can be found on the HCRA's directives and advisories web page.

These changes will enhance the professionalism of the new home building industry and provide greater transparency to homebuyers through more consistent and clear standards. This is a change to the industry that should elevate the confidence buyers have in the construction and quality of their new homes by way of an improved provincial standard based on public and stakeholder consultations over the last few years.

Who is the HCRA?

The Home Construction Regulatory Authority (HCRA) regulates new homebuilders and vendors in the province. Their mandate is to protect the public interest through a fair, safe and informed marketplace that supports the goal of a continuously improved homebuilding industry in Ontario. The HCRA holds licensed builders to professional standards, protects the public interest, and enhances consumer confidence in the homebuilding industry in Ontario. In addition, HCRA strives to educate consumers to ensure that they can make informed decisions and understand the benefits of a regulated homebuilding sector.

Tim Hadwen, HCRA interim CEO stated in a recent interview that the HCRA is determined to identify and take action against builders or vendors who try to operate outside or below provincial standards. He notes that although this is a minority of builders and vendors, the result has been significant hardships for homebuyers that damages public confidence and trust in the industry.

The HCRA is committed to enhancing this confidence, trust and professionalism through:

  1. The licensing of new home builders and vendors;
  2. The expansion of the existing Ontario Builder Directory; and
  3. The implementation of a formal complaints process for the conduct of new homebuilders and vendors.

Through a more robust Ontario Builder Directory, greater transparency will be provided to the public on matters such as the percentage of homes that a builder has constructed with major structural defects, the number of defects under warranty that the builder has refused to repair, and the amount of money the builder owes to Tarion and more. 

The role of Tarion

Tarion will continue to administer Ontario's new home warranty and protection program under the Ontario New Home Warranties Plan Act, and investigate warranty claims, resolve warranty disputes, and manage the guarantee fund. Through this division of responsibilities, consumers are given greater assurances of the protections afforded to them when buying a new home.

If you are a new or experienced builder requiring guidance at any stage of the licensing or complaint process, please reach out to Eric Teichgraf or Mark Giavedoni.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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