I am very proud to be associated with two Registered builders in Ontario. The first one is our family business (Belsito Homes) and the second is affiliated with my brokerage (Stonemill Developments Inc.). Both builders have zero conciliations and zero claims.
Being licensed and providing a Tarion Warranty isn’t optional. It’s the law! In Oakville, every legally built home has a Tarion enrolment number unless it was built by the homeowner, in which case there should be a Letter of Confirmation from Tarion (a new requirement for a building permit in Oakville). Oakville is one of the following municipalities that is working with Tarion in a pilot project to help prevent illegal building. No Tarion enrolment or Letter of Confirmation = no building permit.
- Greater Sudbury
- Middlesex Centre
- Niagara Falls
There are links to Tarion’s website below.
Builders who fail to register with Tarion can face legal action, resulting in possible convictions, heavy fines, and even jail sentences.
It’s not just the missing warranty that puts home buyers at risk. The Canada Revenue Agency will be looking for HST on a new build and there aren’t many ways to hide from the taxman, especially with easily traced documents on Real Estate Boards and Land Registry. CRA is currently targeting British Columbia’s illegal builders with audits and is hiring 85 extra staff to deal with the problem. It’s only a matter of time before the crackdown happens in Ontario. There’s a link to a CBC story about this below.
So it’s not the builder registration fee ($500) or the enrolment fee ($385 – $1,500) that the illegal builders are trying to save, it’s the underwriting and investigating that Tarion performs as part of the registration process AND it’s the 13% HST that they are trying to avoid paying along with income tax on the profit. Being registered with Tarion would put these illegal Builders on the radar with CRA.
See links for more information below:
Requirements for Building Your Own Home
Building Your Own Home in Ontario FAQ
Letter of Confirmation Application Form
CBC’s story about CRA crackdown in BC
I’m not worried about the CBC Marketplace report showing that some sales representatives or brokers are offering to break rules in order to double end a deal because I would not have been filmed doing this. This practice is illegal. There’s a big difference between Customer Service and Agency and we MUST be experts in knowing who we are talking to and what secrets we are giving away. CBC hasn’t named the people caught on tape breaking the rules, but hopefully our regulating body (RECO) will be able to get the names and punish the offenders appropriately. CBC’s reason for not giving up the names was that “experts told Marketplace the problems are not specific to individuals but exist across the industry”. I disagree. During the past few years, I’ve been to hundreds of offer presentations on behalf of my Buyer clients and I can say that the majority of professionals are just that … professional. Once in a while, we’ll come across someone who seems as if they may be breaking rules, but there’s not a lot we can do about it because of the secret nature of the multiple offer process.
The bottom line is that I would NEVER be filmed making these promises to potential buyer clients because I would NOT do this. If I am already representing the Sellers, I usually explain to any potential buyers that they will be treated as a customer. They’ll get honesty and fairness, but I will not divulge secrets.
We did have one situation where we listed a house and then our current Buyer clients wanted to make an offer. Pat sat with the Sellers and I sat in another room with the Buyers. I didn’t offer price advice to the Buyers but did follow their directions to improve their offer. I had no idea what the other offer was. My Buyers were very keen to get this house, likely had more money to spend, and they offered enough so that the Seller preferred their offer. The only reason that these Buyers were treated as clients was because they were already clients. But that meant that neither Pat nor I could advise them about what price to offer. Nor could we advise the Sellers about what price to accept from these particular Buyers. This is Real Estate 101 and all of us should know this inside and out.
That doesn’t mean that Buyers aren’t under the impression that there is something to be gained by “going through the listing agent”. A month ago I was sitting in a Tim Horton’s with some buyers who came through my Open House. We were going to be putting together an offer. They asked me to help them out with price … to give them a hint about what the Seller would accept. I clearly explained, again, that the Sellers were the clients and that while I was very happy to be honest with these buyers, any fiduciary duties were owed to my Sellers, which means I would keep their secrets. These buyers asked me if they should just get their own agent and I suggested that it might be the best idea. I got home an hour and a half later than I was supposed to, didn’t get the other side of that commission, but I did my job and I did it properly. My Sellers were well represented. And if I had provided customer service to these buyers, I would have followed the rules to the letter.
If everyone understood Agency and followed the rules, we wouldn’t have to change a thing. Changing the rules so that Multiple Representation is no longer allowed wouldn’t stop what was recorded from happening. These offenders could just refer the Buyers to a friend who was in on the scam. The best way to handle this situation is to punish the offenders and the only way that RECO can investigate is if they have names. It’s likely that these people would no longer be allowed to trade in Real Estate and that would be the best outcome.