Tarion's warranty service role begins when a buyer enters into an agreement to purchase a new home. We stand behind the builder's commitment to deliver the home to the purchaser on time in keeping with basic quality commitments and to provide after-sales service.
The warranties protecting homeowners when there is a delay in closing or a deposit refund issue start on the date the home is purchased. The warranties that protect homeowners when there is a construction deficiency or after-sales service issue begin on the date the home is available for possession (in the case of freehold homes as well as condominium units). In 2010 there were 54,147 new home possessions which fell under the regulation of Tarion.
Early Communication Helps
While the vast majority of homeowners are able to resolve any issues they have directly with their builder, in 2010 we continued to focus on those new home buyer experiences where the likelihood of a resolution was lower. We found that homeowners who reported a higher number of defects were more likely to require Tarion's involvement in resolving their claim. One of the initiatives we undertook in these cases involved encouraging additional communication between Tarion, the homeowner and the builder. All parties found this additional communication helpful and early results suggest that this approach reduced the extent of the disagreement at minimum, and increased the likelihood of a resolution in many cases.
In keeping with the theme of communication, for issues affecting several individuals in a development we continued to hold "town hall" style meetings which were introduced in 2009. We also streamlined the point of contact for large and complex issues and emphasized the need for transparency when resolving claims, to both builders and homeowners. On the latter point, and in part as a result of recommendations from the Tarion New Home Buyer Ombudsperson, the Warranty Services group committed to providing more information and support for claim settlement offers, and began a review of the language used in homeowner correspondence regarding claim decisions.
In 2010, Tarion also piloted an initiative to better manage warranty claims where the list of defects was particularly large. This project was undertaken because we found the regular claims process to be inefficient and unduly prolonged in cases where a large number of items needed inspection. This was not beneficial for Tarion or its customers. By using a more focused approach that involved multiple claim representatives, we were able to resolve a large claim in just four days which would have taken months to bring to a close using the normal process. Even better, this new approach received positive feedback from everyone involved and will continue to be used and refined where appropriate.
When a homeowner is unable to resolve an issue with his or her builder and we determine that the item is covered under the statutory warranty, we will work directly with the purchaser to resolve the matter. Since warranty claims are typically paid out as repairs are completed over time, the dollar amount of claims paid by Tarion tends to be consistent year-over-year, except when a large claim is settled. In 2010, 937* claims totaling $17.6 million were paid by Tarion. This represents a higher than usual dollar amount due to a number of large payments that were made on behalf of builders who were unwilling or unable to resolve issues with homeowners directly, as well as a long term, high cost repair project involving a subdivision which began in 2009.
Avenues of Appeal
Once a decision about warranty coverage is made by Tarion, a homeowner has the right to an appeal if they do not agree with our determination. Builders also have the right to appeal decisions by Tarion if we refuse or revoke their licence to build homes. These appeals are accomplished through an informal process that is conducted independently by the Ontario Licence Appeal Tribunal (LAT). In 2010, 116 consumer appeals were filed with LAT (down from 166 the previous year) and 28 builder appeals were filed (down from 56 in the previous year).
Those who feel they have not been treated fairly by Tarion can turn to our New Home Buyer Ombudsperson Office, which is available to provide an objective perspective for consumer concerns and determine whether a decision was made fairly. The Office is meant to supplement and not replace formal channels. Accordingly, it does not make warranty decisions, mandate policies, or formally adjudicate issues for Tarion. However, the Ombudsperson Office does publish an annual report which contains recommendations for process improvement and/or policy changes based on the previous year's activity. In 2010, five recommendations were made, all of which were discussed with management. Some have already resulted in changes to our existing policies or processes.
For more information about the New Home Ombudsperson Office or for a copy of the 2010 Ombudsperson Annual Report please visit www.tarion.com.