The Ontario government says it has cleaned house at Tarion Warranty Corp., the province’s troubled homebuilder regulator and new home warranty provider.
Government and Consumer Services Minister Lisa Thompson announced that Tarion CEO Howard Bogach is retiring and the agency’s board chair, homebuilder Paul Golini Jr. has resigned.
“I want to be clear: this is going to be a complete overhaul,” said Thompson.
Under the Rebuilding Consumer Confidence Act, the government will set up a separate Home Construction Regulatory Authority and a new warranty program by fall 2020, following consultations about new regulations to take place next summer.
The Tarion board will be reduced from 16 to 12 members. No more than a third will represent homebuilders and vendors, and at least one board member will be required to have some knowledge of dispute resolution and consumer protection.
The announcement follows a blistering special report in late October by the provincial auditor general.
Bonnie Lysyk found that Tarion put builders’ interests ahead of consumer protections for tens of thousands of new home buyers, who struggled to navigate the warranty application timelines or even receive accurate advice when they called Tarion’s help line. It is supposed to take 180 days for Tarion to ensure the repair of new home defects of compensate buyers. The auditor found it was more likely to take 18 months.
The changes come nearly three years after former associate chief justice J. Douglas Cunningham issued a report with 37 recommendations for improving Tarion’s transparency and warranty protections.
“Tarion hasn’t been doing nearly enough to protect new home buyers,” said Thompson, who is introducing legislation that will separate Tarion’s regulatory authority from its responsibility as a warranty provider.
The new system will provide improved dispute resolution and give the warranty administrator more authority to scrutinize builder applications and inspect homes before the consumer takes occupancy, she said.
“Clearly, having one organization has proven not to work. By stripping out the new home regulatory authority from the warranty program, we are making sure that the regulatory body is autonomous. We are also making sure the ombudsman no longer reports to the CEO.
“We feel this is fairer,” she said.
Karen Somerville, of consumer advocacy group Canadians for Properly Built Homes, said that the governance restructuring is a step in the right direction, but is not the substantial change consumers need.
“In a nutshell, this is another great day for Ontario’s building industry.
“What we heard from the minister is more tinkering and more consultation.
“Meanwhile, we have consumers from across the province who are suffering in their homes today that need immediate help,” she said.
The government needs to go deeper to oust the old guard, said Somerville. She pointed to the installation of Tarion chief operating officer Peter Balsubramanian as the interim CEO, starting in January and noted that the new Home Construction Regulatory Authority (HCRA) is being funded by Tarion.
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A spokesperson for Thompson did not respond to a Star query about whether or not that poses a conflict for the new regulator, which is being headed by interim CEO Tim Hadwen, a former deputy minister, in the Ministry of Health and Long-term Care. Two of the six board HCRA members have Tarion connections, including Heathwood Homes and Heron Homes president Hugh Heron, a former Tarion chair, and former Tarion director Michael Lio of Buildability Corp.
Somerville said she is also disappointed that Ontario is maintaining a single warranty provider, instead of moving to a multi-provider system such as that used by Alberta and British Columbia.
Competition would benefit consumers, she said.
But if Ontario wants to maintain a monopoly provider, it should make buying a warranty optional, she said, as home-buyers are only eligible for a maximum $300,000 in compensation from their builder.
The government’s changes won’t come fast enough to help buyers whose home warranties will expire before the program is restructured, said NDP consumer protection critic Tom Rakocevic.
“We need to have change today. We can’t wait,” he said. “I’m hopeful, but we need to see action now.”
Tarion is not government-funded; its funding comes from licensing fees of 5,600 builders and the registration fees they pay on about 60,000 new homes a year.
There were about 380,000 homes covered by Tarion warranties at the end of last year. In 2018, 63,009 new homes were enrolled in the warranty program, and about half were condos, said the government.
Earlier this fall, under an order from the government, Tarion revealed that its executive took home more than $4 million last year, including $769,410 for CEO Howard Bogach and $241,758 for the chief operating officer. Its directors, many of whom work directly for the building industry, collectively earned more than $500,000.
Tarion rolled out a new form designed to warn buyers of pre-construction condos about the possibility of some developments being cancelled and it changed its online Builder Directory to include information on builders who had previously cancelled projects.
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