Monthly Archives: October 2021

OPEN LETTER TO THE MINISTER OF GOVERNMENT AND CONSUMER SERVICES; GOVERNMENT OF ONTARIO

Subject: New Agency of Government, HCRA, Seems to Promote Builders’ Interests, not Consumers’

Date: Oct. 12, 2021

Dear Minister Romano,

Many consumers were taken aback to read the article published Oct. 9, 2021 in The Toronto Star, (image below) written by your new CEO of the builder regulatory agency, the “Home Construction Regulatory Authority, (HCRA).

In this article, the new CEO and Registrar, Ms. Wendy Acheson, says builders can re-negotiate new home sales contracts they’ve already signed, due to the rising cost of building materials and “other construction costs”, as long as they’re “acting with integrity and honesty”.

THis is a surprising article from a regulatory body. it would seem more appropriate coming from a Builder lobby group. The regulator’s mission is to protect consumers, not the industry it’s regulating.

There are several serious problems with this article from the consumer point of view. I outline a few below.

New home buyers, just as builders, have suffered significant financial hardship during the pandemic. They have also experienced delay after delay in new home construction, while scrambling to find alternative accommodation or financing, as the delivery of the home is pushed further and further into the future. None of these hardships are taken into account in this article.

If builders can re-negotiate sales contracts, can purchasers also do so, if their costs have gone up as well?

But even if they could, few consumers have the extra funds or time to hire experienced lawyers.

The advice from the HCRA CEO is “don’t let yourself be bullied or intimidated“, and “never be misled into thinking there is no choice but to accept new terms”. This doesn’t reflect the real experiences of consumers in the current tight supply market especially when up against large corporations.

Builders must act “honestly and responsibly“, says the HCRA CEO. Have you ever met a builder who would say he doesn’t act honestly and responsibly?

HCRA has a new Code of Ethics we’re told. Most businesses do, but that doesn’t mean it’s enforced, or that anyone has the means to prove anyone else acted unfairly. Unless the purchaser can afford a top lawyer, and has hours of free time, it’s a costly, lengthy battle to try to prove this.

Nowhere in this article does the CEO say that HCRA is the regulator of builders, she only mentions the licensing function. In paragraph 7, she writes “HCRA is responsible for licensing the builders…” This may be a mistake, since it’s in the title of the organization, but for consumers it’s a concerning omission in this article. After the failure of the previous regulator Tarion, consumers need to see the new regulator is doing its job. They want to see clear standards, monitoring of compliance, and transparency in the results and builder track records. Giving permission to builders to renegotiate signed contracts should be at the bottom of the new regulator’s list, if at all.

New home builders already write their own water-tight contracts with the help of top lawyers, and can fend off consumer scrutiny they don’t want during the sales and construction process. Many contracts by major builders I’ve seen include “weasel clauses”, for example forbidding class actions, preventing critiques on social media, and forbidding complaints during construction, …or else the builder can terminate the contract.

Power imbalances in new home purchases are worsening. Where’s the consumer protection?

HCRA’s CEO admits “builders are in a position of power relative to home buyers”. But her advice – “don’t let yourself be bullied or intimidated” – is useless.

She must know builders write their own contracts and include all the extra clauses they like to protect their own interests. Anyone who objects will be shown the door.

Consumers have limited choices in homes they can afford, which might be close to their work or other family members. One buyer told me the advice he got from his own lawyer was to keep quiet about construction problems, or the builder could cancel the contract, since the terms allowed him to do so. For the industry regulator to tell consumers “don’t let yourself be bullied” seems out of touch with what’s really going on in this tight supply market. Some builders may be unfair, unethical, or even by-passing consumer protection laws, but to prove it you’ll need deep pockets for lawyers and months of free time for complex legal battles.

The worn-out advice given to consumers by the Ministry and the HCRA CEO is to “obtain independent legal advice”. This can only make sense coming from government and agencies like HCRA who have their own in-house counsel paid for by taxpayer or home purchaser, and don’t have to pay out of their own pocket.

Sure, lawyers can be “helpful“, as Ms. Acheson says. But these fees could eat up $20,000+ of one’s savings for a simple dispute when the opposing party is a large corporation. HCRA’s advice is blind to the consumer experience and the uphill battle for individuals fighting large builders.

“The HCRA is here to protect new home buyers”, says HCRA’s new CEO. But this article is promoting builders’ interests, not consumers’.

Contracts are supposed to balance the rights and responsibilities of both parties. But if terms are as movable as sand, what credibility do contracts have?

It’s concerning that HCRA in the first months of its operation is coming up with this idea on how builders can protect their profit margins, and promoting this in the pages of major media. If you order a new car to be delivered in six months, and the price of steel goes up, can the dealer renegotiate the price you both agreed to pay in the contract? Would a government agency advocate for this?

Why is HCRA publicizing this practice, which will only decrease home affordability?

This article exemplifies the larger problem: government agencies like HCRA tell us they’re protecting consumers, but show a lack of understanding of the consumer perspective.

A possible solution, which has been suggested to the Consumer Ministry several times, could be to create a Consumer Watchdog Office, to make sure consumer perspectives are understood in policy-making.

After 42 years of the failed regulator Tarion, consumers need to see if HCRA will protect new home buyers, not act as a lobby group for builders. The industry has several of thier own well-financed politically-connected lobby groups to do this.

HCRA still has not answered what is the status of the 95 complaints about licensed builders it received within the first two months of operation, or the Auditor General’s finding that 65% of the time between 2014-18 builders did not repair items they should have under the warranty. These are important questions for consumers who put their life savings into a new home and rely on a well-regulated industry.

We look forward to your response as Minister for consumer protection, part of a government which tells us it’s For The People. How does this article fit into HCRA’s mandate? How does the renegotiation of contracts help housing affordability? How does it create the “fair” marketplace which your ministry promises?

Thank you.

Sincerely,

B. Captijn

Consumer Advocate

————

B.M. Captijn, M.A.,

Consumer Advocate

Blog: www.consumersreformtarion.com

Twitter: @ReformTarion and @ONTConsmrRights

LinkedIn


From: The Toronto Star, Oct. 9, 2021, pg. 5

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