Illegally Built Homes Can Come With a Big Price Tag

TORONTO - Tarion Warranty Corporation is recognizing Fraud Prevention Month with a strong warning to consumers that an illegally built home in Ontario may come with devastating consequences, including a home that may be unsafe to inhabit or a builder who, once paid, abandons the project altogether.

“When it comes to the largest investment of a family’s life, namely a newly built home, it pays to know that your builder has the technical and financial wherewithal to complete the job and that you have the protection of a warranty if anything goes wrong,” said Howard Bogach, Tarion’s president and CEO. “If builders are not registered with Tarion, they are building illegally and won’t provide warranty protection that is legally required in Ontario.”

Bogach emphasized that every builder in Ontario must be registered with Tarion and must enroll all newly built homes in the warranty program. It’s the law. And almost all municipalities across Ontario are supporting it by sharing their building permit information with Tarion. An additional 15 municipalities have partnered up with Tarion to educate consumers who opt to take out permits in their own names as opposed to using a builder licensed by Tarion.

Illegal builds are more than just a bad idea. They can be expensive for homeowners and builders alike. Last year, for example, Ontario provincial courts set down 117 convictions related to illegal building, and illegal builders paid almost $400,000 in fines for proceeding without proper registration, warranties, or permits. In 2016, one builder even went to jail.

Bogach expects this price tag to increase in 2018 because the fines themselves have increased. Beginning in 2018, builders found in violation of the law will face fines up to $50,000 – up from $25,000 – as well as imprisonment for one year, less a day (twice the previous jail time). Corporations building new homes will face the heaviest penalties with maximum fines of $250,000, up from the previous $100,000. Even directors and officers of these delinquent companies are subject to penalties up to $50,000.

For the homeowner, risks are also high. Unregistered builders do not necessarily comply with Ontario Building Code specifications and the new owner can fall victim to poor craftsmanship, including such dangerous and costly elements as electricity and plumbing. There is also the risk that an illegal builder will take a buyer’s deposit and then abandon the build.

In keeping with its mandate of consumer protection, Tarion advises prospective buyers of new homes to recognize the following signs that a builder may be operating illegally. Builders —

  • Say they built the house for themselves but then decided to sell it.
  • Say they offer their own warranty and the homeowner doesn’t need Tarion’s warranty.
  • Say the Tarion warranty is too costly (sometimes quoting $10k when in fact the
  • maximum cost is $1800 plus taxes.)
  • Offer the consumer a brief contract or, worse, no contract at all.

For more information, please contact:

Melanie Kearns, Senior Manager, Strategic Communications

(647) 951-9472 or mediainquiries@tarion.com

    

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