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Recognizing red flags for new homes – Ask a Vancouver Mortgage Broker

October 27, 2013 by  
Filed under Recent News

Buyers of new homes should do their homework and be wary of builders who promise too much, says the man overseeing Ontario‘s regulator for home builders.

Vancouver Mortgage BrokerTarion president and chief executive officer Howard Bogach is touring the province to promote the corporation’s work and warn of illegal building practices. The Ontario government created Tarion Warranty Corp. in 1976 to regulate the building of new homes. It licences builders of new homes and condominiums and guarantees warranties.

Registered builders must have the technical competence and enough financing to allow them to absorb any losses that could arise during a home’s construction.

Bogach said buyers should “make the phone call” to learn if the builder‘s registered. Its website at also has a directory of registered builders.

Customers should ask questions and not be swayed solely by the good looks of model homes, he said.

In the last five years, Tarion investigated 47 cases involving 86 homes in the Belleville area, said Bogach. It has also opened nine new cases this year. Local conviction rates weren’t available Tuesday.

“On average, 18 per cent of the claims we pay out are related to illegal building — about $1 million a year,” Bogach said.

The Ontario Home Builders’ Association and Tarion are working on “raising the bar” for registration by requiring builders to take more courses, association president Eric Den Ouden said.

Builders ought to know the new demands of the business, from science to laws to marketing, he said. Such courses would ensure they do.

It’s more regulation — something against which local builders have fought — but Den Ouden, a Belleville-based builder, said there are good reason for it: quality control for the industry and protection for buyers.

“We’re getting beaten by $5,000 on a house and a lot of times they’re losing $15,000 in product,” Den Ouden said.

Bogach said no new registration criteria would be ready before late 2014.

Red flags
Tarion Warranty Corp. is a private, non-profit corporation responsible for regulating the home-building industry in Ontario.
Under Ontario law, a builder who isn’t registered with Tarion Warranty Corp. can’t sign a sale or  construction agreement with a buyer.

  • * A warranty on a new home costs $385 to $1,500 – a cost the builder may pass on to the customer.
  • * Tarion registered 40,000 warranty forms last year and paid about $5 million to resolve the year’s 493 claims.
  • * There were 1,300 charges and 957 convictions across Ontario between 2008 and 2012. At least one violator received a jail sentence.

Tarion warns buyers to be wary if a builder says:

  • * “You don’t need a Tarion warranty because I offer my own.”
  • * “I could enroll the home in the warranty program, but it would cost you around $10,000.” (Home enrolment fees range from $385 to $1,500.)
  • * “I built the home for myself but decided to sell it instead.”
  • * “We can just put your name on the building permit.”

Source: Tarion Warranty Corp.


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