Bill 166 will give homebuyers better protection

Bill 166 will give homebuyers better protection

December 31, 2007

Ontario's current home warranty corporation is going to be split into two separate bodies, dividing its duties in part to remove the perception of having a conflict of interest, says Toronto litigator Jessica Vickerman.

Tarion currently performs the functions of regulating homebuilders and enforcing its warranty program, but in the near future, it will focus solely on the warranty duties, she tells AdvocateDaily.com. Another agency still to be formed will take on the duties of regulating the sector.

Tarion was created in 1976 to oversee the new home industry, enforcing builder regulations and providing a seven-year warranty. It would also act as an adjudicator between builders and homebuyers, says Vickerman, an associate with the Toronto office of Shibley Righton LLP.

"The government has proposed legislation that would create a separate administrative authority to regulate builders and vendors while Tarion continues to administer warranty claims," she says.

The intention for the restructure was to avoid the perception of conflicts as Tarion — a private not-for-profit corporation empowered to administer and enforce the Ontario New Home Warranties Plan Act — hosted numerous roles and functions.

"That has been an ongoing criticism since Tarion’s creation in the 1970s," she says, noting that a report by Justice Douglas Cunningham and news coverage of its practices may have also pushed the Ontario government to act to reform the agency.

In a Toronto Star story, Cunningham's interim report on Tarion suggested the agency suffered from a lack of transparency, and issues with board governance and resolving disputes. The province also tabled legislation this month that streamlines the dispute resolution process. Bill 166 is undergoing second reading.

"I think the proposed changes will be beneficial for consumers," Vickerman says. "For example, the new administrative authority will be subject to greater oversight and it mandates the appointment of an ombudsperson office, as opposed to the voluntary ombudsperson office that currently exists.

The Act attempts to enhance trust in the process by removing the optics of conflict of interest and introducing more oversight, Vickerman says.

"Theoretically, by separating the functions it would streamline the processes for both of them," she says.

As home prices continue to straddle the stratosphere, Vickerman says maximum protections for new home deposits are still relatively low.

"That's something they're working on, coming up with deposit protection amounts that are more in keeping with the values of today's construction," she says.

However, Vickerman says Bill 166 falls short of adopting the 37 recommendations made by Cunningham in his final report, in particular making home warranties available through competitive insurance markets as they are in Alberta and B.C.