Monthly Archives: July 2019

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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