Consumer Protection - Illegal Building - Why It Matters!

By NextHome Staff
March 20, 2017
Since March is Fraud Prevention Month, you would have heard a lot about how consumers can protect themselves from being victims of fraud.There are all kinds of fraudulent schemes, but one that may not get as much attention as it should is the illegal building of new homes.Certainly, it affects consumers and registered builders alike. So, it’s no surprise that when I am out at events speaking with Ontario consumers or new home builders, the subject regularly comes up as a topic of conversation.What is illegal building? And why is it important that we work to stop it?First of all, for consumers, it can mean that their new home is being built by someone who does not actually have the financial or technical expertise to build new homes. It can also mean that the home is poorly built and does not meet Ontario’s Building Code specifications. It may even be a hazard to live in.The buyer or property owner may also encounter unexpected liability issues during the construction of an illegally built home, especially if an on-site accident happens during construction. And the buyer may not be aware of their rights or responsibilities under the statutory new home warranty once the home is completed.Illegal building also contributes to the underground economy. So, for the majority of good registered builders, the practice can create unfair competition. Since many illegally built homes are eligible for warranty protection under the legislation, registered builders effectively subsidize the warranty on these homes.Illegal building can also have a negative effect on the reputation of the industry overall.One challenge we face in combatting illegal building is that not every new home buyer knows that all builders, by law, must be registered with Tarion and that they have an obligation to provide the new home warranty. Consumers who aren’t aware of this can be deceived by stories of the warranty being optional or too expensive.An illegal builder, meanwhile, may want to avoid the accountability and warranty obligations that come with building a new home. They may also be trying to avoid municipal building code inspections or workplace health and safety legislation.They are gambling that no one will report them to Tarion. Not the homebuyer, neighbours, municipal building departments, subtrades, suppliers or other registered builders. That is why we work closely with everyone in our industry to raise public awareness about this issue and to create confidence in our new home marketplace.Tarion’s ability to combat illegal building depends in part on purchasers and others in the community reporting suspicious activity. Here are some red flags that may suggest your builder is operating illegally:
  • They say they built the home for themselves, but then decided to sell it;
  • They say you don’t need a Tarion warranty because they offer their own;
  • They give you an inflated cost for the Tarion warranty — the maximum cost is $1,500; and,
  • They give you a short contract to sign; or worse, no contract at all.
In short, illegal building affects everyone. It can create liability risks for the purchaser, impact the building industry, including its reputation, and prevent the homeowner from understanding their warranty rights and responsibilities.That’s why illegal building matters.HOWARD BOGACH is president and CEO of Tarion Warranty Corp., a private corporation established to protect the rights of new homebuyers and to regulate new home builders.Tarion.com

Have great ideas? Become a Contributor.

Contact Us

Our Publications

Read all your favourites online without a subscription

Read Now

Sign Up to Our Newsletter

Sign up to receive the smartest advice and latest inspiration from the editors of NextHome

Subscribe