Area of Law: Real Estate Law
Answer # 0457
Are new home builders regulated?Region: Ontario Answer # 0457
In 2019, under the New Home Construction Licensing Act, 2017, the Ontario Government formed the Home Construction Regulatory Authority (HCRA). HCRA is a not-for-profit corporation responsible for licensing and regulating the people and companies who build and sell new homes, including condominiums, in Ontario – a function previously held by Tarion.
Tarion administers and enforces the Ontario New Home Warranties Plan Act. If the builder fails to complete construction of your home and files for bankruptcy, you can make a claim against the Plan to recover your deposit. Builders must first be licensed by HCRA and all newly constructed homes and condominiums in Ontario must then be enrolled in the Plan before a new home can be built (see below).
For more information about Tarion and new home warranties, visit other Answers in Real Estate Law.
Home Construction Regulatory Authority (HCRA)
Along with licensing and regulating builder and sellers of new homes in Ontario, HCRA is also responsible for:
• handling home buyer complaints about the conduct of their builder or vendor
• enforcing high professional standards in competency
• managing the Ontario Builder Directory (OBD)
What is the process for building a new home?
Before a new home can be built and sold, a number of steps must take place:
1. The builder/vendor must obtain a licence with HCRA;
• A builder of new homes must be licensed as a builder
• A vendor of new homes must be licensed as a vendor
• A builder who builds and sells new homes must be licensed as a builder/vendor
• A builder who builds contract or custom homes on land owned by the owner of the home, must be licensed as a vendor and builder
2. Builders and/or vendors must enroll their homes with Tarion after issuance of a building permit or 30 days prior to construction.
3. Tarion will review all enrolments to ensure that the builder/vendor has met all the conditions.
4. Once all conditions are met and fees paid, Tarion will provide the vendor/builder with confirmation of enrolment.
5. After receiving enrolment confirmation, the vendor/builder can proceed to build the home and provide the warranty information.
What is the Ontario Builder Directory (OBD)?
The Ontario Builder Directory (OBD) is a searchable database provided by HCRA that provides information about Ontario’s approximately 5000 home builders and vendors.
In addition to Ontario’s New Home Construction Licensing Act, 2017, other building codes and municipal bylaws exist that govern the building, fire, energy and plumbing standards in the design and construction of new houses and buildings. For example, the Ontario Building Code establishes detailed technical and administrative requirements, and minimum standards for building construction in the province. Visit Ontario.ca for more information.
Federal National Building Code (NBC)
The National Building Code of Canada 2020 (NBC), developed by NRC Construction Research Centre, sets out “technical provisions for the design and construction of new buildings.” The Code also applies to the alteration, change of use and demolition of existing buildings. The National Building Code forms the basis for all the provincial building codes. Some provinces have adopted the NBC in addition to their own building laws and regulations, however, Ontario only bases their codes on the federal model.
For more information about the Home Construction Regulatory Authority (HCRA) or to make a complaint about a licensed builder or vendor, visit their website at hcraontario.ca.
For information about new home construction and construction issues, visit Construction Law
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