Bob Aaron, a real estate lawyer with Aaron & Aaron in Toronto, says Tarion essentially acts as an arm of the government and can only act in accordance with its mandate, therefore, Tarion sometimes brunts undue criticism.
“They’re operating within the confines of the legislation and regulation that are already set up,” said Aaron, “so I fault the government for (the shortcomings), not Tarion.”
The government intends to take a more active role in establishing warranty terms and reset deposit protection measures so that they’re commensurate with today’s price points. It will also provide builders with improved dispute resolution guidance, while making the process less onerous for homeowners.
Aaron sat on the Tarion board from 2009-2011 and says he never witnessed impropriety.
“We were dealing with a lot of things there,” he said. “One was we got legislation changed during my time; there were builders who were passing on fake costs to buyers and we got legislation changed to prohibit fake costs, like development charges.”
But Tarion’s builder directory – which logs malfeasance – has been opaque for years and still has a long way to go, he says.
Still, Aaron is critical of the government’s inaction on the deposit protection front. Deposits of up to $40,000 on houses are protected, and only half of that for condos, but those amounts are woefully meagre relative to today’s home prices.
“They’ve been diddling around this for years,” said Aaron. “In 2016, Tarion publicly committed to conduct a review of deposit protection, and on March 28, 2017 Tracy McCharles [Minister of Government and Consumer Services] stated Tarion needs to move forward.
“What’s taking them so long?”
He added that government acts swiftly when it has to, like when it implemented the 15% non-resident tax.
“Meanwhile, prices from 2003 to now have doubled, tripled, quadrupled and deposits are no longer anywhere near the $20,000 range,” he said. “They should, frankly, get off their behinds and do something immediately and do something because people are out there every single day putting down six-figure deposits on condominiums and they’re not protected. The government can act quickly when it wants to, but it’s not acting quickly enough on deposit protection. Consumer protection isn’t a priority for this government.”
Frank Leo, a broker with REMAX West Realty, welcomes the Tarion update in the form of a third-party arbiter because he says it will lend the entire process more credibility than it’s had till now.
“If you’re the one with the insurance and you’re making the decision, there could be some perception of bias,” said Leo. “I think having a third party would make the process at least seem fair, and I think it’s better for everyone. It’s a good thing.”
He cited a case wherein his client found a defect and informed the builder, who kicked their tires and waited for the buyer’s limited one-year warranty to expire, thereby robbing them of their recourse.
“There are some problems and it takes them a little while to get resolutions,” said Leo. “There were some rules in place, and having clearer information for the consumer is a good thing. As a realtor, we try to inform our clients so that they’re taking full advantage of the warranty. We provide knowledge.”
The provincial Liberals have announced amendments to the Ontario New Home Warranties Plan and, specifically Tarion Warranty Corp. in a bid to protect consumers. But while the announcement is lauded by many, some in the real estate industry question why changes didn’t come sooner.