NEW-HOME WARRANTY
Critics want a choice
Not enough is being done to overhaul Ontario’s new-home warranty system, says a group opposed to the monopoly held by Tarion. “Premier (Kathleen) Wynne has publicly stated that ‘the time for monopolies is over,’ ” said Windsor homeowner Gay Viecelli. “Why then is her government keeping Tarion?”
Tarion is a non-profit corporation created in 1976 to regulate home building and provide newhome warranties in Ontario. Public meetings held by the government over the summer led to Bill 166, the Strengthening Protection for Ontario Consumers Act, which will strip Tarion of its regulatory power in 2020 but will allow its warranty monopoly to continue. Viecelli asked Wynne at a Windsor town hall in February why the government had blocked a freedom of information request from Canadians for Properly Built Homes. The group wanted to see documents from meetings in the summer that led to the creation of Bill 166.
Wynne said she would have to check and asked a staff member to provide an answer to Viecelli, who said she’s still waiting for a proper response.
Ultimately, Viecelli wants what she sees as a better new-home warranty system, so that her grandchildren won’t have to experience what she did — being required to deal with Tarion without the chance to shop around.
A decade ago, Viecelli had a home built. She said there were a number of deficiencies but when she turned for help to her warranty provider, Tarion, she encountered resistance.
“I believed that I had a home warranty and that Tarion was the provider who was going to support me when I had problems with the builder,” Viecelli said. “I learned that was not the case. Tarion was very quick to deny claims, even small claims.”
She acknowledged that Tarion did eventually cover costs to replace an improper tub, but she said it did not fully cover other issues. She has since sold that home and built another without the use of a builder, and therefore did not have to buy a warranty.
But Viecelli has continued working with the consumer advocacy group Canadians for Properly Built Homes.
“Tarion is first and foremost a consumer protection organization that protects consumers by regulating builders of new homes and by backstopping the Ontario New Home Warranty if a builder is unable or unwilling to fulfil their statutory warranty obligations,” said Tarion spokeswoman Laurie Stephens, noting that the company ensures builders have the financial, technical and customer service capabilities to build homes. “The warranty coverage on new homes and condos is among the most comprehensive in Canada.”
Stephens said Tarion helps consumers in other ways, too. “Well before paying out a warranty claim, Tarion helps homeowners who are working through issues with their builders and in many cases we are able to help the homeowner reach a resolution with their builder without having to pursue a claim,” she said by email. “Tarion also promotes improved building and customer service standards through education.” Builders pay between $435 and $2,034 to enrol a home with Tarion, which provides a new-home warranty, a cost usually passed on to the buyer.
Hired by the government for $112,000, Justice J. Douglas Cunningham conducted a review and made 37 recommendations that would effectively shut down Tarion. “I would have liked to see Justice Cunningham’s report fully implemented,” said Karen Somerville, president of Canadians for Properly Built Homes. “He provided a comprehensive road map to go forward. The main recommendation is to follow what most of Canada has done and create a competitive warranty model in Ontario. That is the main one that would have really facilitated a lot of great changes for Ontarians.” Somerville applauds the government for recently approving a value for money audit of Tarion, though such a review won’t happen before 2019.
“What we often hear from homeowners is that Tarion seems to protect the builder rather than the homeowner,” said Somerville, who acknowledged that Tarion does help some consumers. “It really starts with the governance of Tarion. The board is very dominated by builders, not consumerprotection advocates, and it has been that way for 42 years.” Somerville said Tarion’s own reported numbers suggest it could do more to help homeowners dealing with faulty new homes.
The 2016 Tarion annual report, the most recent available, shows the company paid out $10.2 million in claims — but took in $24 million more than all of its expenses. As a non-profit private corporation, Tarion is not included on the province’s Sunshine List, which provides public salaries over $100,000. But in 2016, Tarion paid almost $25 million in salaries and benefits. The Toronto Star, based on documents available in the United States but not in Canada, has reported in the past that Tarion CEO Howard Bogach made about $700,000 in 2013, including bonuses.
As well, at the end of 2016, Tarion had more than $542 million in investments.
Matteo Guinci, spokesman for the Ministry of Government and Consumer Services, said more protections for homebuyers are coming, thanks to the Strengthening Protection for Ontario Consumers Act.
It “will improve the dispute resolution process for homeowners, strengthen the regulation of new-home builders and vendors, give government the authority to make rules and set standards, and help improve accountability and transparency,” Guinci said in an email. “Some changes took effect immediately, including strengthened oversight of the Tarion Warranty Corporation.”
New deposit protections have already been implemented. And in the future, the minister may set selection criteria for Tarion board members, limit the numbers from one group and appoint the chair. “The government is committed to undertaking further study on the feasibility and impact of implementing (Cunningham’s) remaining recommendations,” Guinci said.