Consumer Protection: Fraud Prevention Month Keeps Buyers Aware of Any Problems

Not only does March herald the beginning of spring, it’s also Fraud Prevention Month. And as new home construction ramps up with the warmer weather, we want buyers to be aware that illegal builders may be at work as well.To help protect homebuyers, fines for illegal building were recently increased under the Ontario New Home Warranties Plan Act.The increases are significant: As of the beginning of the year, individuals found violating the law can face fines of as much as $50,000 – up from $25,000 – as well as imprisonment of up to two years 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 fine. Their directors and officers can also be fined up to $50,000.The increases in fines and jail time are intended to act as a deterrent for illegal builders who may compromise the safety and functionality of your new home, not to mention tarnish the reputation of the entire industry.So what constitutes an “illegal” builder? The definition applies to any builder who enters into an agreement of purchase or sale or a construction contract for a new home and is not registered with Tarion. It’s also illegal to start building a home or condominium without first enrolling the project with Tarion.Choosing a legal builder is important and I can give you a number of good reasons why.As part of their registration with Tarion, legal builders have to pass a written test on the Ontario Building Code and prove that they have the technical competence and financial means to produce a well-built home. Legal builders and vendors also respect the legal requirement to enroll the new home or condo in the warranty plan.Purchasers of new homes are entitled to deposit protection and delayed closing compensation, a one-year warranty on work and materials and Ontario Building Code violations, a two-year warranty on defects e.g., water penetration, and seven years for major structural defects.If the home is built illegally, there are at least two concerns. The homeowner is less likely to know their warranty rights. Also, homeowners could end up with a building that may not even be safe to live in or be financially responsible for problems that occur later on.To be on the safe side you should always check the Ontario Builder Directory on Tarion.com for information on licensed builders.In line with Fraud Prevention Month, if you believe a builder is not licensed please call the Tarion anonymous tip-line at 1.800.786-6497. All information remains confidential.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