“This House is Going to Kill Me”

Daniel Emery’s heartbreaking story: from home-believer to home-wrecked, to advocate for change

Photos of Daniel, from 2015 and 2019

I hope one day, after almost 10 years of writing about the broken Tarion warranty legislation in Ontario, I’ll be able to write a story on how Tarion has protected consumers in crisis, instead of abandoning or over lawyer-ing them to death.

This is not that day.

Last weekend, homeowner Daniel Browne-Emery passed away after a long battle with a cruel and relentless cancer, and the government agency Tarion, which seemed to him just as cruel and relentless.

This is my personal thank you to Daniel and his family for their years of efforts to make Tarion the consumer protection agency the legislature once intended it to be.

Like the rest of us advocates, Daniel wanted the government to follow justice Cunningham’s #1 recommendation in his 2017 review to open the warranty field to competition, and end Tarion’s government-granted monopoly and bias toward builders.

Like most advocates who work toward this goal, many have been victims of Tarion themselves, and have advocated at the Ontario legislature for years for changes to the laws governing Tarion. Daniel was one of us.

Here are some of my memories of this honest, strong, courageous consumer advocate.

I didn’t know Daniel well, but within a few moments of hearing his nightmare story in 2013, anyone could empathize. How is it even possible this could happen in Ontario, a modern democracy with a government agency regulating builders and protecting consumers? Each time I tell his story, it’s met with incredulity and anger. The story continues to haunt us, and should haunt our legislators. But other than the usual platitudes about protecting consumers, they seem focused on keeping the building industry happy.

Tarion is a political problem. It was created by politicians, and only they can solve it.

And they have not.

I first met Daniel at the office of an Opposition MPP at the Ontario Legislature in 2013. We were there to support a bill brought by the NDP to fix broken Tarion. That, and many other meaningful bills were never passed by either the Liberal or the PC Parties, both well-known to have close relationships with builders and developers, while telling us they’re champions of the little guy.

What happened to Daniel, and sadly continues to happen to new home buyers in Ontario, should never should have happened, and could have been avoided.

In short, here’s Daniel’s troubling story, which I wrote about on this blog site http://www.consumersreformtarion.com in 2018. I hoped after that the Consumer Ministry would take action, but nothing happened.

Daniel moved into a newly-constructed home in 2007. A few weeks later, he discovered water on the basement floor, which led to flooding. He contacted Tarion, and the builder; Tarion requested the builder take action, but little was done. Months and years passed with Daniel pleading with Tarion to help him. Mold began to take hold, with black slick and patches “as big as pizzas” in Daniel’s words. Tarion finally did some visual mold remediation, but didn’t fix the underlying cause of the water infiltration. By 2008, Daniel said there were four feet of standing water in his basement, and slimy black mold on the staircase carpet and walls.

In 2011, his bank refused to renew his mortgage, because he couldn’t get insurance for the home under these conditions. The bank then foreclosed, and Daniel was left homeless, and lost over $270,000 he’d invested in the home.

Financially devastated, he then was hit with bad health news, a diagnosis of throat cancer. His oncologist asked if he’d ever been exposed to mold. “My heart sank when I heard this”, Daniel explained.

When I spoke to him in the summer of 2018, he could barely talk due to the ravages of cancer and the on-going treatments. He was at work, driving a heavy truck, on one of the routes he liked to drive from Toronto to Quebec City. He stopped to have a coffee at a roadside shop and half-joked to me that he seemed to scare people away now, they looked askance at him with his weight loss, long hair, and misshapen smile.

He said when he read my blog post, it made him break down. He was grateful I’d sent it to the Minister and various journalists to try to get someone to do something about the nightmare he’d suffered.

When a consumer threatens to go public, Tarion often swoops in to stop the wheels turning, secret meetings are held, consumers are sworn to confidentiality, and many who are in dire financial straits have no choice but to sign a non-disclosure agreement (NDA).

There’s been no meaningful action from our government, except window-dressing weak bills, and posturing about how Tarion protects consumers.

Daniel’s local MPP had written a letter on his behalf on Sept. 27, 2013, to the then Liberal Minister, stating: “He lost his home due to the actions, or more specifically the lack of action from Tarion. Mr. Emery was forced to foreclose on the home and lost everything waiting for Tarion to take action again the builder.”

Exactly.

Now this long-time PC MPP is part of the current PC government, but he’s gone silent. In the meantime, the builder has gone on building more homes, with nothing mentioned on his Tarion record, and no way for future home buyers to be forewarned.

In the fall of 2019, Daniel felt the cancer again pressing at his heels. He wanted to make sure, if he couldn’t do anything in his own case, that others wouldn’t be devastated like him. He offered to drive to Toronto and tried to arrange meetings with journalists, even though he was weak and could barely speak.

I asked if there was one point which encapsulated his ordeal, one dark moment when he was about to give up. He thought for a split second, and said, yes. Every Saturday, he said to me, he’d spend scraping black, slimy mold from the basement staircase and walls, with his dog often beside him. In a moment of desperation, he turned to his dog and said, “I think this house is going to kill me”.

Tarion refused to give Daniel certain reports, like the mold report they had commissioned, and which was requested by his oncologist. Tarion told him repeatedly his case was closed, because he no longer owned the house. They also refused to issue him a “Decision Letter” which would have allowed him to have his claim heard at the License Appeal Tribunal.

If two major corporations want to battle it out for years on a legal matter, fine, they’re equal adversaries, and fighting on a level playing field, with comparable finances and resources. But most new home buyers are on their own, self-represented, and can’t afford $400-$1,000 per hour for experienced lawyers, and even more for engineers reports. This is not the time for a consumer protection agency to bring out the heavy legal artillery, hard-hitting emails, and heavy-handed tactics. But that’s what Tarion did in Daniel’s case. And too many others I’ve seen.

This tragedy should have been prevented. If the root cause of water infiltration isn’t addressed, it will recur and get worse. Tarion failed to get to the root of the problem and fix it. Treating symptoms doesn’t work long term. The builder and Tarion ended up blaming the homeowner, as happens too often, and they let time slip away until Daniel was too ill and financially devastated to keep fighting for justice.

One of the serious problems with Tarion is it says it can’t force the builder to do anything, the warranty is the builder’s, and Tarion is only there to ‘back-stop” it, and make sure they fulfill their obligations. But often they don’t even do that. The Auditor General’s report (Oct. 2019) found that in 64% of cases from 2014-18, Tarion did not get builders to fix warranted defects.

Why is this still going on?

Too much influence from builders, too much concern about protecting the builder’s “privacy”, no teeth to enforce the Building Code, buck-passing from municipalities to builders to Tarion, too lax oversight by government. Still a deeply flawed system.

But builder lobbyists like it, say it’s “working well”. However, the legislation wasn’t created to protect builders, but to protect new home buyers.

Daniel and his wife finally got a meeting with Tarion’s CEO in early 2020, thanks to the continued advocacy of a not-for-profit consumer organization. The current Tarion CEO is a former in-house lawyer, as are many of his VP colleagues. All are well-versed in legal tactics to protect Tarion and builders, and get claims dismissed.

This last contact Daniel had with Tarion top executives at their head office, was physically and emotionally painful, he told me. He was asked to sign a non-disclosure agreement. A dying man? What’s the objective of that, where’s the decency?

He told me a few details of the meeting. One made him smile, he said, telling me he knew it sounded childish, but as he was leaving, he asked the CEO if he knew where he could get one of the glass coffee mugs with the Tarion logo they had in their offices. The CEO said he wasn’t sure. His colleague lawyer then disappeared into the kitchen and came back with a mug.

After 13 years of battling Tarion, maybe this was for Daniel a spoil of war, something physical taken from the enemy to prove you’ve survived.

Refusing to give this dying man a mold report so he could give it to his oncologist, is an unnecessary bully tactic; making a dying man sign a non-disclosure agreement for a meager settlement while he’s lost his life savings through the actions of a shoddy builder, while he relied on this government agency to protect him, is unforgivable. Not listing these defects on the builder’s record is adding insult to injury, and worse, complicit with shoddy builders, and a disservice to future new home buyers.

I know Daniel would have liked to hear that his work in the end counts, and won’t be forgotten. The house may have killed him, but Tarion and our lawmakers look like willing accomplices.

——— by B.M. Captijn, Jan. 5, 2021

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The Spin Doctors are Back: Tarion

More consultants, more training, more round tables and focus groups, more brochures, and pilot projects, the list goes on. More money is being spent out of the $400+million warranty fund, but still no fix to “broken Tarion”.

That’s the conclusion many have made after looking at Tarion’s progress report it issued this month on the implementation of the Auditor-General’s 32 recommendations.

The spin-masters are back in full force.

Why hasn’t government learned from their past lapses in oversight, why do they still expect Tarion to fix itself and write its own report card?

Tarion’s task was to implement the 32 recommendations of the Auditor General after what the Toronto Star called in July 2020 a “blistering” report on their operations.

The problem with Tarion’s self-evaluation is they re-frame serious systemic issues as simply a lack of communication, lack of training, lack of resources, or misunderstandings. As if we new home buyers just don’t get it, or are confused.

But the major problems the Auditor revealed in her 2019 report were not miscommunications or misunderstandings. They were conflicts of interest favouring builders over homeowners, executive incentives to minimize claim pay-outs, letting builders off the hook for warranty obligations and pay-backs, not reporting builder performance accurately, bias toward builders in the investigation of honesty and integrity complaints, and corporate governance imbalances favouring builders.

Here’s part of Tarion’s self-evaluation below. Of the 25 recommendations under their control, 19 have been “completed” they say, with 6 to be done next year. Let’s check this.

“Auditor General’s Implementation Plan – Fall update” … published by Tarion, 2020, on tarion.com website

Based on the continuing desperate calls from homeowners to consumer advocates, the Tarion problems have been getting worse, not better.

It would be too long to go through all 25 of these in one blog post, but for brevity’s sake, let’s fact-check 6 of them.

Point 11 in the Auditor’s report:

The auditor advised Tarion take all information about a builder’s track record into account before granting a future licence to build.

Tarion has marked this item as “completed” by saying it “has revised its processes and currently requires this type of information to be considered when deciding to grant a license.”

Problems with this:

  • This process is not transparent; who knows what information Tarion is taking into account before licensing builders? Is the oversight ministry checking this?
  • “Considering information” is too vague to mean anything; not the same as taking action on it or disclosing it on a builder’s record;
  • No specifics on what “processes” Tarion says it has “revised”.
  • This is another “trust us” from Tarion

Point 12:

Tarion is to confirm that builders have the financial resources to complete projects and cover cost of their warranty obligations.

Tarion has checked this item off as “completed”, saying it has “reviewed the best available external evidence to determine which information builders should provide“, the “reasons they cancel construction projects“, and that they’ve “implemented a new process to collect and review this information.”

Problems:

  • What is this “new process”? How is this different from before? Does it protect consumers, just because it’s “new”?
  • In the past, builders have refused to disclose to Tarion certain key information in their financial records, (eg: the Urbancorp case), by refusing investigations, and Tarion has said it has no authority to require a closer look at the builder’s books.
  • The same has been the case with the reasons builders give for cancelling condo projects. The reasons are often vague, such as not being able to get financing, while they quickly go onto to build other projects.
  • What is the “new process” to “collect and review” this information? Saying it’s new and improved doesn’t make it so. Especially since Tarion considers builders as one of their main stakeholders, and two builders are long-term Tarion board members and builder lobby group members.

Point 15:

This recommendation states that Tarion is to ensure homeowner complaints against builders are properly investigated.

Problems:

Tarion has checked off this item saying it “has added additional resources to initiate and complete investigations… and eliminate the backlog”.

But this is not an under-staffing problem, it’s a conflict of interest problem. It can’t be remedied by adding staff and clearing the backlog of complaints. This seems like re-framing the problem to minimize it and chose a desired solution.

Another similar problem of bias toward builders is reported in the Auditor’s analysis, pg. 9. When builders say homeowners denied them entry to the home to fix defects, Tarion didn’t bother to get the homeowner’s side of the story. This is an ingrained problem of bias toward builders, not an under-staffing problem, or a lack of training.

Point 20:

Tarion was told to make the Builder Directory show results of their investigations into honesty and integrity issues, show the amount of money still owing to Tarion by builders, show the number of defects under warranty the builder refused to repair, and number of Building Code violations builders refused to repair. This has been checked off as “completed”, but it hasn’t been.

Problem:

In the vaguest language possible, Tarion says it has added “past convictions” to the list (meaning when builders were building homes without providing the Tarion warranty), but for the other important aspects of builder records we read: “Tarion sought public input on additional information that should be posted on the Builder Directory”, […] “and has up-dated the Builder Directory with this new information”.

This is meaningless: it says we’ve added nothing to the list, and added that nothing to the list too. How can this be taken seriously? Are our government oversight experts asleep or complicit?

Point 27

Tarion was to make sure their staff had Building Code certification before they inspect homes for Building Code violations. This item has also been checked off as completed.

Problems:

  • Tarion says it’s added “a training program” for staff in this area. But the Auditor’s report called for Building Code certification, not training of internal staff.
  • Building Code violations are now going to be “reviewed by staff with the relevant qualifications” or “by external experts as needed.” But this gives too much discretion to Tarion to decide if defects are Building Code violations or not, and to use outside experts only if they decide to do so. This is an on-going problem with Tarion: lack of specific training in the defects they are sent to investigate, lack of qualified Building Code inspectors, and secrecy surrounding what experts are hired and when, and often no action even when engineer’s reports are obtained.
  • What has changed here? More training and reviewing.

Point 29

The Auditor’s report said the internal Ombudsperson’s office is to have formal independence from Tarion.

Problems:

This has also been checked off by Tarion as complete, but that’s not correct.

The Ombudsperson is to report to Tarion’s board and be reviewed by the board, after doing her own “self-review”. There were serious problems cited in the Auditor’s report regarding exorbitant pay raises for the Ombudsperson herself, and the potential sharing of confidential homeowner information with the internal legal department. These are all huge conflicts of interest, and should have prompted resignations, but all this was kept secret until October 30, 2019.

This Ombuds office is still paid by Tarion, and housed within their offices. Although it is formally supposed to be reporting to the board, it is not in any sense independent of its employer. The office has recently changed its name to New Home Ombusperson’s Office, eliminating the word Tarion, but that fools no one.

There has recently been – you guessed it – a consultant, another lawyer, hired to find out whether this office adheres to the general ombudsperson principles. Undoubtedly chosen and paid for by Tarion, so one can already guess the outcome.

Since the Ombudsperson doesn’t have a mandate to get involved in warranty claims or disputes, it’s hard to see what purpose the office has at all. Most consumers say it’s a time-consuming, frustrating, and useless exercise to contact this office. This money would be better spent fixing homes.

The list could go on and on, with each of the 25 recommendations showing more spin than substance.

We rely on the Ministry of Consumer Services as oversight authority and the Auditor general’s office in her next audit, to see through the PR and do their fact checking, instead of relying on Tarion’s version of reality. We’ve seen what that has yielded after 43 years.

In early 2020, the Ministry promised the public a “complete overhaul from top to bottom”, after admitting repeatedly Tarion was “broken”. But it’s a sad joke on consumers to call this an overhaul.

For many consumers still suffering in newly-built homes with serious construction defects, this report card is no more than a promise to consult, review, hire more consultants, and conduct pilot projects. That’s what Tarion has been doing all along, it’s a gold mine for consultants.

The same executives are in place at this monopoly, and many have been at Tarion for over a decade, including the board Chair, CEO, and several senior VPs. So….

…why didn’t they take action before? Because there was no effective oversight which would have forced them to do so. Now these same executives stated they found the Auditor’s report “a useful exercise in self-examination”.

Why does the government allow Tarion to keep this lucrative monopoly which forbids other providers from entering the field? What’s the product or service they provide? Why is it mandatory?

Many consumers say Tarion has cost them more in a long, exhausting, costly whodunits, without resolution. They’ve lost years of their lives, and suffered financial ruin and health problems trying to get defects resolved through Tarion. It has cost many consumers more than it’s worth. Ask the Shuman family, the Emery, Bellefeuille, Ferland or Wheeler families, just to name a few.

Since Tarion has had its regulatory duties taken away, (as of Feb. 2021), and is not allowed to use the word warranty in its name anymore, (since the Auditor said it doesn’t provide a warranty), what is Tarion’s purpose?

This Tarion “Implementation Plan” of the Auditor’s 32 recommendations is just that, a plan. But worse, it’s a fig leaf for the serious underlying, decades-long problems of conflict of interest, and bias toward builders, which remain unresolved.

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One year later – what’s still wrong with Tarion Warranty Corporation?

After the hard-hitting Auditor General’s report on Tarion released in October of 2019, what’s changed at Tarion, the broken warranty and builder regulatory monopoly?

Not much.

Tarion executives and Consumer Ministry officials unanimously and immediately accepted all thirty-two of the Auditor’s recommendations. So you’d expect to see the marching orders have by now had some effect.

Hard to find any progress.

The executive team has been left largely the same, with some big promotions from within, and a long-time board member has been rewarded with the top position of Chair of the board. How could those who were fine with the broken system in the past be those you trust to fix it? Where have they been all these years? Seems an odd way to make a new start and bring about a major culture change.

The NDP Critic, MPP Rakocevic, suggested an independent administrator, reporting to the Ministry, be appointed to oversee Tarion’s processes and activities. That idea was quickly dismissed by Premier Ford’s government.

Big mistake.

We understand the Auditor’s team will do an up-date of their findings next year, in 2021.

Here’s what many consumers on the receiving end of Tarion’s broken system have found during the last year….

12 continuing problems:

  • 1) Still – the burden of proof is often on homeowner to prove construction defects, whereas they should only have to show credible symptoms. Tarion’s representatives say they won’t climb up ladders or look on roofs, so they won’t warrant anything they can’t see. The consumer loses, Tarion and builders win.
  • 2) Still – too many non-disclosure agreements and “services gestures” are being used by Tarion, which allow builders to avoid having defects listed on their records, and allow bad builder track records to remain hidden from the public. Consumers lose.
  • 3) Still – too few investigative inspections on home defects by qualified inspectors. Consumers lose.
  • 4) Still – no independent dispute resolution (DR). Tarion’s DR is not seen by consumers as independent of Tarion, or impartial. Too much discretion is left to Tarion to decide methods of DR without proper independent oversight. Consumers lose.
  • 5) Still – no consumer advocates on Tarion’s board (or the new regulatory board, “HCRA”) . Two long-time board members are builders, four others have ties to the real estate industry, and none appear to have any background with the consumer experience with the warranty. Consumers lose.
  • 6) Still – no transparency in policy-making: consumers have no idea what becomes of their input into policy consultations, or what influence builder lobby groups have had on the end result. Consumers lose.
  • 7) Still – there are conflicts of interest in Tarion’s stated mandate: serving its own interests, those of builders, and government officials, but also the new home buyer. Serving the “public interest”, meaning everyone, is too broad, and no one has the same at stake as the homeowner. This is a 43-year-old flaw in governance. Why is everyone afraid of consumer advocates on a consumer protection board? We lose.
  • 8) Still – no cap on legal fees used out of the warranty fund to fight consumers; no cap on executive salaries, and no transparency about how executive bonuses are calculated. Consumers lose.
Why are we still here?
  • 9) Still – Tarion seems to be continuing to license builders with shoddy records. There are too few consequences if the builder doesn’t pay back money owed to Tarion, and there is continuing secrecy about their records. Consumers lose.
  • 10) Still – consumers are told if they dispute a Tarion decision they can appeal it to the License Appeal Tribunal (LAT), where about 85% of consumer cases fail. The 2017 Tarion review recommended the LAT not be used for these appeals. It’s not a level playing field, since most consumers are self-represented, and Tarion is always represented by experienced litigators. Consumers lose.
  • 11) Still – consumers are being blamed for denying entry to a builder to fix defects when this isn’t true. Tarion often doesn’t hear the homeowner’s side, and will use this to deny claims. If the relationship between builder and homeowner has broken down, Tarion should appoint another builder to do repairs, and not subject the homeowner to humiliating or hostile confrontations in their own home. Consumers lose.
  • 12) Still – Tarion has kept the word “warranty” in its name, whereas the Auditor’s report said they don’t provide a warranty. Consumers misled, confused.

The “complete overhaul”, announced by the Ford government’s Minister Thompson in early 2020 looks like a sad joke.

The PC government’s frenzy to build more homes faster, cut red tape for builders, and keep the Ontario Home Builder’s Association (OHBA) on side, has been their overriding objective, with the OHBA President describing Tarion as “a good system” in June 2020. (Legislative Committee on General Government).

The reason for creating a new home warranty in the first place is to protect new home buyers, full stop. Its purpose shouldn’t be to protect its own executives, or builders who build defective homes, or government officials who are lax in their oversight responsibilities.

In late February, 2019, the Ford government announced “Tarion is broken”. Still, almost two years later, that’s exactly right.

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STEPPING BACKWARDS: Premier Ford’s Bill 159 on Tarion

Many parts of the the PC government’s new bill 159 on Tarion Warranty are concerning.

The bill purports to fix “broken Tarion”, but ignores much of the independent advice government has been given for over a decade on how to fix it. This advice has come not only from independent reviewers such as judge Cunningham, but also from the Auditor General’s special audit in 2019, and advice from senior ministry officials dating back to 2014, based on a decade of consumer complaints about the warranty provider.

Minister Lisa Thompson and her Parliamentary Assistant, long-time MPP Bob Bailey, led the praise for their own bill during Legislature debates, March 5th. The Opposition Critic, MPP Rakocevic, countered with thoroughly researched evidence from the independent review, and nightmare stories of consumer experiences with Tarion, which never should have happened under Ontario consumer protection laws.

Parliamentary Assistant to the Minister, MPP Bailey
Consumer Services Minister Lisa Thompson

A complex legal forum…

Let’s take just one example of one of the major failings of bill 159: the government decided to keep the License Appeal Tribunal (LAT) as the appeals forum for Tarion claims. Why? This goes directly against the advice of the Tarion review, and consumer complaints for over a decade to the ministry. The LAT is a complex legal forum, most consumers have to self-represent due to the high cost of legal assistance, and they lose 83% of the time.

As far back as 2014, Tarion was advised to find less litigious forum than the LAT. The top official of the Ministry stated in a letter to Tarion’s CEO dated Oct. 7, 2014, pg. 3:

A less litigious and adversarial process would also address concerns the ministry has heard from homeowners that they are dissuaded from pursuing LAT appeals because the existing processes are non transparent, and are complicated, time-consuming, costly, and un-balanced.” (Assistant Deputy Minister F. Denton)

The PC government has a chance to make this right in their new bill, and they have a majority in the Legislature, so why didn’t they follow expert advice and eliminate the LAT as a dispute resolution method, since it’s obviously not working for consumers? Perhaps because it’s working well for Tarion and builders.

It gets more concerning.

In his speech to the Legislature on March 5th, MPP Bailey said the new bill would also “remove builders and vendors as parties at the License Appeal Tribunal”. He claimed this would “restore balance for consumers.” As it stands now, Tarion usually adds the builder as an “Added Party” to the hearings. Removing the builder from the hearings will only encourage more behind-closed-doors legal strategizing between Tarion and builders on how to get homeowner appeals dismissed. Currently, the builder’s collaboration with Tarion is on the record, and transparent for the adjudicator to take into account before making a judgement.

More secrecy creates more imbalance, and doesn’t bring transparency which the LAT needs to show its decisions are fair. Who advised the government on this idea is unknown.

Minister Thompson and MPP Bailey also say Tarion will now have access to other dispute resolution methods. But they have all along, and have not chosen, to my knowledge, to use other methods such as mediation or arbitration. They win 83% of the cases at the LAT, they can afford to hire top outside counsel and engineers, so they have no incentive to look for other options. They can make their own regulations with very little oversight, and the governing legislation dating back to 1976 has given them the power to use arbitration (section 17 (4), which to my knowledge has rarely, if ever, been used.

To give more discretion to Tarion to decide when and which other dispute resolution methods are to be used is repeating the problems of the past: lack of transparency and accountability to the homeowner and the public.

Consumers should also not be made to sign “non-disclosure agreements” or NDA’s, no matter what type of dispute resolution is chosen. Future home buyers have the right to know who the shoddy builders are, and Tarion and the ministry often tell consumers to “do their research” on builders before buying. So their track records should be public.

The last point which has totally escaped the PCs in this bill is that the dispute resolution processes at Tarion, whatever they are, are not independent of Tarion. They should be. In order for justice to be done, it has to be seen as being fair, transparent, and balanced.

The judge’s review summed up this problem on pg. 5 of his 2017 review:

“(…) there is a potential for conflict when the same person receives a claim, investigates it, attempts to assist the parties in resolving the claim, and then sits in judgement if the claim is not resolved.” (Justice Cunningham, Tarion review, 2017)

Keeping the LAT as the appeals forum, and giving Tarion more discretion which methods to choose, allowing them to train their own employees as in-house mediators (as was announced last year), is all reinforcing Tarion’s power, but not protecting consumers and building trust in a broken system.

There is no credible dispute resolution if it remains internal at Tarion.

This is not an “overhaul” as the Ford government tries to spin it, with the promotion of a few in-house lawyer executives, the retirement of the CEO, and more Liberal party platitudes about “enhancing consumer protection.” There’s no point re-arranging the deck chairs when you have a hole in the boat.

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Premier Ford: Follow the Review’s Advice – End Tarion Warranty Monopoly

A year-long independent review of Tarion Warranty Corporation, conducted by Judge Cunningham and Deloitte Consultants in 2016-17 recommended: end the monopoly, open the field to competition.

The PC party was then in Opposition and fully supported this. But this year, the PC government, now with a healthy majority, has done a flip-flop. They’ve brushed the review under the rug like it never existed.

What’s changed in a year? What research does the government have to over-ride a year-long independent review, which interviewed a broad range of stakeholders, and surveyed warranty programmes around the world? We see none.

The conclusion of the review was clear: warranty providers are not “a natural monopoly”, as regulators are; competition in providers would better serve consumers.

The Minister of Consumer Services, Ms. Lisa Thompson, is not disclosing what research they may have to justify keeping Tarion’s monopoly. Two things are clear: the government wants more homes built faster, less red tape for builders, and builders themselves like to keep the monopoly, probably because they can control it better than several independent providers. Forty-two years of Tarion history have shown this to be the case.

In a recent public statement, the Minister cited “higher costs” for consumers if the government were to decide on the competitive model. Not true, according to a B.C. housing official, Mr. T. Gioventu, in one of the ministry’s consultations I attended in March 2019. He said the cost would be “about the same” as what Tarion charges now. He also said the multi-provider system was “working quite well” in B.C. He pointed out that dispute resolution was independent and timely, with both parties incentivized to reach a solution through arbitration if an initial resolution can’t be reached.

Keeping Tarion’s monopoly in Ontario means consumers are still stuck with the License Appeal Tribunal as an appeal court for Tarion’s decisions, where they are up against two adversaries with their lawyers, Tarion and the builder. Consumers are mostly self-represented, and lose 83% of the time. This makes no sense from the “For The People” government, and seems tone-deaf on consumer protection.

Consumers, at every consultation I’ve attended over the past 3 years, have been unanimously in favour of ending Tarion’s monopoly status, having indirect choice in providers through the builder’s choice of insurer.

What’s happened to this feedback? Journalists, oddly, leave Tarion pretty much alone and don’t seem to want to poke a big litigious monopoly of government. But here’s an opportunity to find the story behind the story, and inform consumers before they buy new homes. Industry lobbyists and political donations are part of the picture, no doubt.

The Minister also stated her concern that smaller builders may not be able to get insurance if Tarion’s monopoly is removed. But that’s good for consumer protection, isn’t it? If a marginal builder can’t get insurance to build new homes because he has a poor record, who wants to buy a new home from him and risk their life savings? The consumer shouldn’t be a proving ground for those who want to build homes but don’t have the expertise or financial stability to complete the task properly.

It seems on this point the government is off-loading part of the risk of new home building to the consumer, the person least able to bear the financial burden of construction defects. Tarion has continued to license builders with poor records, says the Auditor General’s report, pg. 7: “builders with poor warranty records continued to get licenses from Tarion.” So consumers continued to buy homes from builders who should have had their licenses removed. The Builder Directory track record, administered by Tarion and a builder-heavy board, is no help either, and has been critiqued for a decade, as “less than useless”.

Another advantage of the competitive model is that warranty providers, for example in B.C. and Alberta, can inspect a builder’s work during construction. They do this to manage their own risk. Although Tarion has had the authority to inspect, it rarely has, and has not hired many qualified inspectors. So more risk is passed on to the consumer. But who’s been watching them?

Prevention is the best warranty. Preventing defects from happening in the first place can be partly done through professional inspections on worksites, and proper supervision of trades on site, but Tarion has had no incentive to do so. They often pass the buck to municipalities on inspections, who then pass it back to Tarion and the courts. And the Ministry’s advice has too often been “sue the builder”. Why should the taxpayer fund part of Tarion’s dispute resolution?

With no oversight by the Auditor General in 42 years, and minimal oversight by the Ministry, there’s been a mission creep from the original intention of consumer protection in 1976 to builder and Tarion protection. See pg. 8, of the Auditor General’s report stating that executives have been incentivized to deny claims and bolster their own pay. Shocking. Has it stopped?

Interesting that when Tarion was confronted with 32 hard-hitting recommendations of the Auditor-General in October 2019, they immediately accepted all of them without reservation. Makes one wonder what they’ve been doing all these years, and what the oversight Ministry has been doing: they knew the processes and compliance tools weren’t working, but did next to nothing. Because they could. What’s changed now? What will change by government keeping Tarion as the sole provider?

It’s hard to find an example of a government-granted monopoly which provides an excellent product. Monopolies have little incentive to improve: they have no competition which can keep them on their toes or coax away customers.

If there were competition, maybe some insurers could offer a 5-year instead of a 2-year HVAC warranty, or provide a menu of other warranty options. We are forced by law to buy Tarion’s product, whether we like it or not.

Tarion says it offers a “backstop” to the builder’s warranty, but according to the judge’s review this is not an insurance product, (pg. 5, Tarion review). And it shouldn’t be called a warranty either, according to the Auditor’s report, (pg. 22).

The competitive model for warranties would guarantee each provider is offering a true insurance product, and would come under the regulation of the Insurance Act. Tarion offers an insurance-like product but isn’t regulated like an insurance provider. Too often the finger-pointing takes over after a defect is discovered, the buck gets passed back and forth between the builder and homeowner, then there are months or years of delays, and often the defects don’t get fixed at all. The Auditor’s investigation found “about 65% of the time between 2014 and 2018 the builder should have fixed defects under warranty but did not.” (Pg. 7 Auditor’s report, 2019).

Consumers want competition, more innovation in warranty features, independent dispute resolution, end the monopoly

Many believe Premier Ford’s “partnering” with the building industry to build more homes faster with less regulatory red tape has put this political agenda above consumer protection.

Premier Ford has been quoted saying governments shouldn’t be running monopolies. We agree. Both the Tarion review and the Auditor’s report show why Tarion is not protecting consumers. The government is not disclosing why they are ignoring the review and keeping the status quo, except for announcing the retirement of the CEO a few months ago.

This is not a ‘transformation” as the minster has announced, it is not fixing a broken system. It is leaving consumers with the same risks and un-transparent system that both judge Cunningham and the Auditor-General came to the table to solve.

Consumer protection is the responsibility of the Ontario government by law. But builders and Tarion seem to have gotten their wish lists. When will Premier Ford stop selling “we need a million homes”, and start making sure these homes are properly built and consumers are properly protected in the biggest purchase of their lives?

Tarion was created by the Bill Davis PC government in 1976 after a building boom and a rise in shoddy new home building. Here we are again at the same table four decades later. But Premier Ford has side-stepped consumer protection entirely in his new bill 159.

“Those who don’t learn from history are destined to repeat it.”

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“We’ve Been Lied To”

It’s hard to imagine a more serious critique of a government agency than the report released last week on Tarion “Warranty” Corporation by the Auditor-General of Ontario (link below, Oct. 30, 2019).

The report came as no surprise to consumers who’ve been hammering at the doors of Queen’s Park for over a decade with complaints about exactly the kind of corporate wrong-doing the report documented.

Just a few of the revelations of wrong-doing are:

– Tarion has given disproportionate influence to builders and their industry lobby group on its board and its policy-making;

– Tarion makes its own regulations without sufficient oversight by government;

– Tarion’s senior management was rewarded financially for minimizing financial aid paid to homeowners;

– Their legal department tried to obtain internal confidential information to use against consumers in court;

– Tarion doesn’t do enough due diligence to ensure builders have the financial stability to be licensed and build;

– Tarion keeps secret information on builder’s track records;

– 65% of the time between 2014-2018 builders should have fixed the defects under the warranty, but did not. (pg. 7, Auditor’s report).

– Tarion can’t call itself a “warranty” corporation because they don’t provide a warranty.

Added to this scathing critique of Tarion’s policies is the equally hard-hitting review of Tarion in 2017 by a seasoned judge and Deloitte Consultants, which recommended removing Tarion’s monopoly, opening the field to competition, a separate regulator for builders, and a total of 37 recommendations. Nothing meaningful has been done.


Many consumers have been sabre-rattled into silence by Tarion and some of their builders and lawyers over the years, warned not to use words like “corruption” or “collusion” regarding Tarion’s business practices, warned to stop saying there are loopholes in Tarion’s “warranty”, threatened with defamation lawsuits, spent time in jail for refusing to pay Tarion’s legal fees, (yes, jail), and some sternly admonished by the Chair of the board not to be “disruptive” at its Annual Meetings (see 2015).

Even a quick reading of the Auditor-General’s report shows Tarion has reason to muzzle its critics, block them on social media, and prevent them from speaking out publicly.

Tarion’s laizzez-faire model of oversight was praised by a former Chair of Tarion, (in a 05/15/15 article in the Ottawa Citizen) stating the oversight model “keeps the government’s nose out of doing things”.

Yes, no kidding.

Tarion was given a public trust mandate in 1976, a monopoly to protect consumers and regulate builders. They have clearly too often failed in both of these duties to the public.

Consumers feel they’ve been sent on a fool’s errand by the governing Liberals and PC’s for over a decade, some have lost their life savings and endured family hardships trying to get construction defects fixed in their new homes. This agency set up to protect us has too often failed in its mandate, and been successful in covering it up.

What makes disturbing reading is the “Tarion agrees and accepts” text after each of the serious critiques of their activities. Where has the Tarion CEO been for 10 years? Where have the in-house lawyers been, with their professional code of ethics to act in the public interest?

The Tarion mea culpas seem fake and hollow. As does the well-meaning promise of the Minister of Consumer Services who welcomes the Auditor’s report, vowing to “work together” with Tarion, and better educate consumers.

What needs to be done?


1) The Tarion board and CEO should be asked to step down. They’ve lost credibility. They don’t deserve our trust any more.

2) Our legislators need to bring new legislation to protect consumers against shoddy builders, not builders against consumers.

3) Legislation needs to end Tarion’s monopoly. Other warranty providers will refuse to license bad builders due to their responsibility to manage their own risk. Let Tarion continue to license as many bad apples as they want, let’s see how that works out for them. They may fall on their own sword.

The response from the current PC government to the Auditor’s report is timid. Premier Ford himself has said not one single word. The minister says consumers need to be better educated, a page right out of the builder lobbyist’s and Tarion playbook. Tarion has seen the light, we’re meant to believe, and vows to “work with” the government to fix itself.

Premier Ford’s much-publicized plan in early 2019 to “partner” with the building industry to build more homes, faster, and cut red tape, seems directly opposed to any serious effort to rein in this rogue monopoly and make it accountable and transparent.

Tarion has failed in its responsibility to the public, while too often taking advantage of vulnerable consumers. We’re being asked to trust them. Again. We’re not buying it. They’ve been selling us a product they don’t have, and masqueraded as consumer protectors while protecting builders, their monopoly, and their pocketbooks.

The message to the public is we’re working with Tarion, and Tarion with the Ministry. Which is what brought us this policy failing in the first place.

This is a political problem, and only our governing MPPS can fix it. Have they already made promises to the building industry and its puppet? The refrain of we agree and we’ll do better is not credible. Too little, too late. Beware of the crocodile who sheds a tear before devouring his prey. Drain the swamp.

*****

http://www.auditor.on.ca/en/content/specialreports/specialreports/Tarion_en.pdf

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Ontario’s Consumer Protection Act needs an up-date. My Open Letter to Premier Ford

Dear Premier Ford,
 
You stated this week, in answer to allegations that lobbyists have direct access to you and direct influence over your policy-making: “No one can influence Doug Ford or our cabinet.”
 
 
 
That’s good to hear from you directly.
 
 
 
The optics over the past year in the media indicate something different, however. We’ve seen building industry and real estate lobbyists in photo ops at Queen’s Park, presenting their public submissions to Ministers, and later applauding your new legislation, such as the “More Homes More Choice” Act.
 
 
 
You promised in many of your speeches to be “For the People” and “to Protect What Matters Most”. Many are still hoping this is more than a slogan.
 
 
 
By means of this Open Letter, I’m asking you to consider making an amendment to what seems to be a gap in Ontario’s Consumer Protection Act, (CPA).
 
 
 
Currently, the Consumer Protection Act, S.O. 2002, Chapter 30, Schedule A, says no business can force a consumer to agree to arbitration to resolve disputes, or prevent them from engaging in a class action suit. Your Consumer Ministry’s website says: You are not bound bythese clauses, even if you have accepted the agreement.”
 
 
 
However, the Act excludes real estate transactions from these protections.There is also no ‘cooling off period” allowed for freehold new home purchases, as in the case of condos.
 
 
 
The Act states, under “Exceptions”, Part 1, (2) (f): “This Act does not apply in respect of: (f) consumer transactions for the purchase, sale or lease of real property…”
 
 
 
Why are real estate transactions excluded from the Consumer Protection Act? A new home is often the largest purchase many Ontarians make in their lifetime.
 
 
 
If you buy a fitness club membership, it seems, you have more dispute resolution options than if you buy a new freehold home. This doesn’t make sense.
 
 
 
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No one to date, either lawyers, legal academics, current Ministers or Opposition MPPs I’ve spoken to has been able to explain how this exception got into the Act in 2002. Where’s the consumer protection in this?
 
 
 
I am asking you to consult with consumers, and consider an amendment to the Act, taking out this “exception (f)”, and including real estate purchases under the protections of the CPA. With the growing concern about complex, developer-friendly new home contracts, the legislation seems weak in achieving its overall intent of consumer protection.
 
 
I hope you will take action on this. If not, can you provide your reasoning?
 
 
 
Thank you,
 
Sincerely,
 
Barbara Captijn
Independent Consumer Advocate

 

 
 
 
 
 
 
 

 

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Lions versus Lambs. The Sad State of Consumer Protection in Ontario Real Estate Purchases

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As a consumer advocate, I sometimes accompany self-represented litigants to court to provide a bit of moral support. I often feel I need to write about what I see.

I found myself recently apologizing to new immigrants to Canada for how they were treated by a major developer during a new home purchase, and the complex legal maneuvering which followed. (This was a freehold home purchase, not a condo.)

I’ll tell you why below, and what I think needs urgent attention.

For nine years now, I’ve watched our politicians drag their feet on reforms to consumer protection laws and changes to the builder/warranty provider, Tarion. Consumers are still left to flap in the wind in too many of these important consumer protection areas.

Other provinces like Alberta and B.C. have a Consumer Protection Watchdog, or Homeowner Protection Office. Ontario has neither. Our members of the provincial Legislature have recently been in the media announcing their “partnering” with building industry officials to build homes faster. They’ve also admitted the regulator/warranty provider, Tarion, is broken, but they still force consumers to deal with a broken agency. The government and industry’s joint PR efforts to make us #homebelievers, and their combined push to “cut red tape”, is concerning.

Who’s protecting the consumer? That’s supposed to be the provincial government under The Consumer Protection Act.

The couple whose court case I attended, I’ll call them Ann and John, submitted copious documents to the court, which I read, as well as the developer’s documents. Ann and John are self-represented litigants up against one of the largest home builders in Ontario. English is not their first language, so they were supported by an interpreter/paralegal.

Here’s a brief summary of their story from the court documents:

Ann and John were one of 350 consumers who obtained a ticket to a sales event organized by a high-profile developer/builder selling 90 pre-construction homes outside Toronto.

At the filled-to-capacity event, they met with two sales representatives of the builder. These are not licensed real estate agents, and they’re apparently not required to be.

Ann and John were told they had to sign a 58-page sales agreement (APS) the same day, if they wanted to buy one of the homes. In a pressure-packed and hurried atmosphere, they chose the model of the home they wanted from several designs shown to them.

They were told they had 15 minutes to review and sign the 58-page APS. There was no highlighting of fine-print clauses waiving certain rights, no explanation of these special clauses.

They signed the APS, and gave the initial deposit required of $25,000 to purchase a specific model of one of the 90 homes.

As the completion date drew near, they made the other payments totaling $150,000 for the deposit.

They were allowed to visit the newly-constructed home on the day before closing. During the builder’s walk-through (the Tarion “PDI”), they noticed a bay window promised in the plans for the second floor was not there, and several interior layout features had been omitted or changed. They objected to this, since it was not what was agreed in the plans. They asked to extend the closing date to resolve this, but their request was denied.

They refused to close because of this. The developer then forfeited their full deposit, held Ann and John in default, and sold the home to someone else.

We trust we have laws to protect consumers from companies who don’t deliver what they say they will in their contracts. We trust reputable, long-standing builders with a positive corporate image. We know government, lawyers and lawmakers have an obligation to act in the public interest. We trust the government agency, Tarion, to publish accurate builder track records, even though this has been critiqued for years as inadequate, and the entire agency is now described by the Minister of Consumer Services as “broken”.

Despite all the laws we have, well-paid government agencies, and their duty to serve the public, I’m concerned about what I learned reading these court documents.

Developers hire top lawyers to draft these APS contracts to protect their interests. They’re filled with fine print, which can deprive you of rights you thought you had. A top litigator once told me you can include any clause in an APS you want, but the developer wants buyers who make no changes and have no conditions. He’ll move on to the next person waiting in line, if you want to add or change anything.

It’s not fair to blame the consumer for not doing research on builders, or being naive. The broken Tarion builder track record is the responsibility of government, and it’s next to useless. Where is one to look for accurate builder track records?

Many of the cases like this one finally get settled with a gag order on the consumer before the media writes about them, so the public can’t get a lot of information on high-pressure sales tactics and lop-sided contracts.

Well-established developers are major advertisers, often high profile philanthropists too, politically well-connected, and backed by powerful industry lobby groups. Consumers tend to believe prominent builders are good corporate citizens, and will be transparent and fair in their business dealings, because that’s the law.

The APS signed by Ann and John contained several clauses which take away certain rights a consumer ordinarily has, and shift too much risk from the developer to the purchaser. Here are a few examples:

The APS waived rights such as:

i) their ability to obtain independent legal advice;

ii) there was no cooling-off period after the signing of the documents, as allowed as in condo purchases;

iii) The consumers were made to agree that disputes must be resolved by arbitration.

But the Consumer Protection Act says even if a consumer signs a contract agreeing to arbitration, he’s not bound by it. However, real estate transactions seem to be specifically excluded from this Act. I found this in reading the developer’s court documents and checking the legislation itself: “The Consumer Protection Act: 2002, SO 2002, c.30, Sch A. ss. 2(2)(f)”. The Act specifically exempts from its application “transactions for the purchase, sale, or lease of real property“.  This is not mentioned on the Ministry’s website under the section “Your right to seek help.” Why not?

How can the consumer be aware of this? Several lawyers I asked about this didn’t know real estate transactions were excluded in the Act.

iv) Another clause in the APS states that the buyers must give up their rights to commence or participate in a class-action suit. How can a developer take away anyone’s rights to legal remedies? Shouldn’t this be overruled in the Consumer Protection Act? No, apparently, because the Act doesn’t apply to real estate transactions.

That doesn’t make sense, if the purpose is to protect consumers.

The Tarion warranty doesn’t apply either, unless the deal closes. In any case, Tarion is “broken”, as stated by former Consumer Minister Walker, on Feb. 20, 2019, in the ministry’s news release.

v) The APS also included a list of 18 types of “permitted alterations” the developer can make to the home or lot  – “for any reason”. Bay windows, the main feature in dispute, are not mentioned as a permitted alteration. The municipal building plans, also filed as a court document, still show the home still with bay windows, no revisions.

Transparency? … full disclosure?

The case is scheduled to proceed in October. Many of these cases can drag on for years, until the consumer is exhausted, financially and emotionally, and gives up.

We need our legislators to step up to the plate and act in the public interest.

I have three specific questions for the new Minister of Consumer Services, Hon. Lisa Thompson, (the third minister in one year in this portfolio):

1) Why is there no cooling-off period mandatory for new freehold home sales, as for condos? Why discriminate based on type of home ownership?

This is a major purchase, and consumers need the 10-day period to review the complex 58+ page contract with an independent, highly experienced lawyer. This might reduce the number of disputes, cut down on court time, make closings more smooth for both parties, and create more harmonious communities.

2) Why are real estate transactions specifically excluded from protections of the Consumer Protection Act?

The new Condo Act protects condo purchasers, but what about freehold home buyers? Why should developers be allowed to mandate the use of arbitration, or forbid class action suits?

3) Why not require written disclosure of any changes to the layout of the home, if it differs from the one attached to the  signed APS? Why aren’t all physical changes to the exterior structure required to be filed at the municipal building authority? (Or why is there no enforcement?)

No one likes surprises in contracts. Both parties expect full and timely disclosure. Harmony on closing day is better for both sides.

Good consumer protection laws balance the risks and responsibilities of both parties, and don’t disadvantage the consumers they’re meant to protect. The new Minister should take action to fix these gaps in consumer protection.

For example:

make a standard purchase contract for all new home sales, protecting the rights of both parties;

– create a Consumer Watchdog Office to protect new home buyers from heavy-handed sales tactics by large corporations, and oversee fair and balanced contracts, regardless of type of ownership.

Lambs are no match for lions in court; the lions always seem to be able to afford more justice. 

Premier Ford and his government promised to “protect what matters most”, and act #ForThePeople. These gaps in consumer protection laws are concerning. This needs Minister Thompson’s urgent attention.

 

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What happened to bill 166 on Tarion reform? Where’s the “For The People” government?

Consumer's Reform Tarion

A promising article in The Toronto Star published on March 28th, 2017, written by an investigative reporter announced –

“Province Stripping Tarion of Builder-regulator Role”.

It quoted the Liberal minister saying Tarion’s multiple roles as warranty provider and regulator “can give rise to a perception of conflict of interest, and could result in actual conflict, or conflicts of interest.”

This came as no surprise to many observers.

Consumers and provincial MPPs have known for years that Tarion is the only government agency on the planet to have the two conflicting roles of warranty provider and builder regulator. We can thank former Premier Bill Davis for this in his 1976 legislation. And every Premier after him, for doing nothing to fix this.

Consumers have complained that Tarion favours builders, leaves homeowners to pay for construction defects, and doesn’t properly regulate builders. The two-headed monopoly should end, that was a key recommendation of Judge Cunningham’s Tarion review released in March 2017.

What has the government done since then?

In June, 2017, former Premier Wynne’s government put together a “working group” to hammer out recommendations for new legislation in June 2017. But the 10-person group was skewed toward Tarion and the building industry executives, who vowed to fight the judge’s review, and to keep the monopoly. The group was sworn to secrecy and instructed to ignore several of the judge’s key recommendations.

I was the only consumer advocate in this working group, and was told several times, once in a whispered coffee-break encounter by a former Tarion CEO, and another time openly in the working group by a senior Tarion official, to stop critiquing Tarion’s policies. The whole point of new legislation is to do just that. However, anyone who’s ever critiqued Tarion’s policies will tell you what it’s like to be on the receiving end of their displeasure..

The Liberals finally introduced a weak bill 166, in late 2017. It called for a standalone builder regulator, but was silent on most other areas of consumer protection recommended in the judge’s review. All Opposition parties voted against the bill as lacking in consumer protection legislation. Which it is.

But where is bill 166 now? 

Most of us think if a bill is passed, it becomes law. Not so. Why are laws designed to protect the consumer so difficult to understand, even by those who’ve read the 93-page bill several times? Consumer protection laws should have a summary at the beginning to inform consumers what the bill says, and what it means to them, and when it will become law.

I called a friend of mine this week who follows Queen’s Park and legislation very closely, to OpenBookask him to find out what the current status of the bill is. For us as ordinary citizens, minsters are hard to reach, and they often stay aloof from these questions, unless you’re championing one of their issues du jour, or do something outrageous and get media attention.

Here are five quick points he explained to me:

1)  A bill passed by the Legislature comes into force “upon proclamation”, i.e. on a date to be set by Cabinet. It is not law until that date. If Cabinet doesn’t set a date, there’s no law. Some laws may be on the books for years, and never proclaimed. Many bills have been put under review by the new Ford government, if they had not previously been proclaimed.

2)   Bill 166 consists of five “schedules”.  Each schedule can come into force on a date to be named by Cabinet, the Premier’s inner circle of ministers.

3) For schedules 1 and 2, no date has been named. These will only come into force “upon proclamation”, if a date is set. Schedule 2 is the one which creates two separate entities, but neither of the entities is named. As long as no date is chosen, these schedules are not in force.

4) The current government is under no legal obligation to proclaim anything which has not already been proclaimed. Laws could sit there for years, and ultimately expire. (Even Wynne’s Liberals seem to have been reluctant to proclaim their own bill 166. Maybe they too knew it was a lemon.)

5) Schedule 4 allows for some amendments to the existing New Home Warranties Act, and it came into force when the bill was passed by the Liberals last December 2017, largely due to Opposition parties pushing for this. This allows, in section 5.4, for the Auditor-General to conduct value-for-money audits of Tarion.

This is a ray of light.

No independent authority such as the Auditor-General’s office has ever been able to look at Tarion through the microscope, or analyze its effectiveness or efficiency in carrying out its mandate to protect consumers. Sunshine is a good disinfectant.

Tarion should finally be open to scrutiny, show the public why it denies claims, show if its dispute resolution is impartial, show what it pays executives, and if its board includes any bona fide consumer advocates, etc.

The Auditor-General’s office now has the authority under bill 166 to examine Tarion from a value for money perspective. This audit will apparently be released sometime in 2019.

As for the new PC government, Premier Ford promised to be a leader #ForThePeople , to fight for the little guy. But many of us are seeing strong indications that developers have his ear. His minister’s social media posts show them smiling and socializing with members of the major building lobby groups. Ford is apparently against anything he sees as “anti-business”.

But there’s nothing more anti-business than allowing shoddy builders to sell new homes with construction defects to consumers. No reputable builder would want to do this, or survive in any business doing this.

The problem is Tarion too often shields the bad apples from accountability, uses heavy-lawyering, technicalities of the warranty, and delay tactics to wear down the consumer. This too often results in builders walking away scot free, and the consumer left to pay for their wrong-doing, or facing long, unaffordable legal battles.

The Tarion CEO’s compensation of over a million dollars is made up of 60% bonus, but no one knows what the bonus is based on. With eight builders on Tarion’s board approving it, this is one conflict of interest which begs an answer.

As the Consumer minister said in the 2017 in The Toronto Star article, : “Tarion is too far removed from government”.

True, and that’s bad for business. Without consumer protection, which creates consumer confidence, there will be fewer new home sales.

We have no clear answer why the Ford government is not acting on the legislation by at least choosing a date for proclamation of the other schedules, or announcing it will come with its own bill. Non-answers like we’re studying the issues, etc., are all we have.

The judge’s review already studied Tarion in a year-long review. It takes no more than 3 or 4 hours for an average person to read and understand most of it. Why the delay in implementing it, or even announcing anything whatsoever? The ministry’s website is a big void on this important consumer protection subject.

More years of discussion, debate, and research won’t change the well-known problems with this 40-year old legislation.  Many agree with Premier Ford that government shouldn’t have a monopoly in anything. Monopolies are an outdated business model and provide poor service. To open up the new home warranty field for competition would be good for business, and good for the clients of those businesses too.  Consumer protection legislation is to protect consumers. Time to do that.

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If the people cannot trust their government to do the job for which it exists – to protect them and to promote their common welfare – all else is lost.” Barack Obama

 

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Something can be legally right, but morally wrong. Daniel Emery’s story

“Tarion is broken” finally admits our government, (Feb. 21, 2019). Here’s my blog post from last summer re Daniel’s story.

 

It seems the longer a legal fight drags on, the more complex and bitter it becomes. Over time, more problems are created, adversaries become more adversarial, while at the outset common sense, fairness, and empathy may have solved the problem.

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Few cases illustrate this better than the painful experience of Daniel Emery.

A snapshot of Daniel’s story:

In October 2007 Daniel took possession of a newly constructed home, built to replace his original home destroyed by fire. After about 15 days, the basement flooded. He notified the builder and Tarion Warranty Corporation, the government monopoly responsible for new home warranties and licensing and regulating builders. The builder visited the home, but no action.

By December 2008, there were over four inches of standing water in Daniel’s basement, in addition to Building Code violations he discovered. More delays, no remedy.

Tarion visited the home in April, 2009 and did an investigative inspection. The inspector advised Daniel he had caused the water infiltration, and recommended he buy some bleach to get rid of the mould. Tarion instructed the builder to re-route the sump pump discharge pipe until another solution could be found. In 2009 Tarion did a mould remediation which took away the visible mould, but did not address the underlying problem.

Living with slimy, black mould in a new home

Daniel describes what he tried to do:

“I pleaded and waited for nearly four years for repairs to be made regarding water and mould throughout my new home. I spent four years with black, slimy mould dripping down the basement walls, mushrooms growing from carpets, all the while waiting for Tarion to honour their warranty. They never did. This after receiving a letter from Tarion stating “all defects are covered by your warranty.”

A homeowner’s nightmare

Daniel continues:

These defects negated the issuance of the final Occupancy Permit to legally inhabit the home. Then in the 4 years while I was waiting for Tarion to resolve this, my mortgage came up for renewal, and I was unable to get home insurance, so consequently the bank would not renew my mortgage on this 4-year old home. The bank then foreclosed on me, and I was homeless. I was financially devastated after the foreclosure, and was then diagnosed with throat cancer.”

Losing everything

I spoke to Daniel today who, in his raspy, post-cancer-treatment voice, told me:

“One of the questions my oncologist asked me was if I’d ever been exposed to a mouldy environment. My heart sank”.

Foreclosure, homeless

The bank foreclosed on his home on Nov. 2011. Major unresolved defects meant no home insurance, no insurance meant no mortgage, no mortgage, no home.

To this day Daniel’s been denied compensation under Tarion’s new home warranty. He received replies from senior Tarion officials, one saying i) “yours was not a contract home“; 2) “you did not own the land prior to construction“; 3) “you cannot prove financial loss“. Daniel says he can prove Tarion is wrong on all three points. They still refuse to give him a copy of the mould report, saying it’s none of his business.

Tarion: Friend or Foe?

Consumer protection legislation should  protect consumers

A consumer protection agency of government created to protect consumers, should do just that. The Tarion case-law often quotes judges saying “it is common ground that Tarion is consumer protection legislation.”

So how could this go so wrong?

I first met Daniel in 2013 with another group of consumers who had come to Queen’s Park to urge MPPs to fix the 40-year-old Tarion legislation. I was shocked at his story then, I’m shocked now. Fast forward to 2018, no fix. The legislation is still badly flawed.

How Tarion legislation is flawed:

i) Tarion says it can’t force builders to do anything to fix construction defects, it doesn’t have the “compliance tools”.  (Quote from Tarion interim report)

ii) There’s a conflict of interest in Tarion adjudicating disputes and guarding the purse-strings on pay-outs. Disputes should be handled by an independent body.

iii) Tarion can’t be both regulator of builders and sole warranty provider. This is an oddball model which exists nowhere else. Because it doesn’t work.

iv) Tarion’s financials continue to raise eyebrows: $26+ million paid in salaries, $12+ million in administrative expenses, only $6+ paid in claims in 2017. Does this organization cost more to run than it’s worth in consumer protection results? (see Tarion Annual Report, pg. 59).

Politics can ruin your life

Mould and water infiltration in one’s new home is not, at the outset, a legal problem. It requires someone with skill to fix it in a timely and cost-efficient manner, and make sure it doesn’t happen again. The courtroom, threatening legal letters, or making homeowners responsible for someone else’s wrong-doing, is not consumer protection. No outcome should leave the homeowner financially and emotionally destroyed.

The judge

Justice Cunningham’s Tarion review in 2017 recommended a separate builder regulator and multiple warranty providers, in total 37 recommendations to protect consumers. Our legislators need to re-read it and implement it.

Hoping legislators will right these wrongs

Daniel has returned to a job where he has a lot of time, alone, to think. His thoughts are still consumed with the nightmare he’s experienced. He still hopes for some compensation. What consequences did the builder suffer, if any? Did he get his license to build removed? Is there a note on his Tarion record warning other consumers? No.

Ontario builders are politically well-connected and well-funded, so they look after their own interests through their own lobby groups. Who’s standing up for the consumer?

Members of the Provincial legislature need to hear Daniel’s plea below:

I join him and other consumers and advocates who’ve been working to get Tarion fixed for over a decade.

In his words:

...”My time on the mortal soil may be limited. Please help future new home buyers, by following Justice Cunningham’s recommendations to dismantle Tarion and offer consumers a choice of warranty provider and a separate builder regulator.”… Respectfully, Daniel Emery, 27/08/2018

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