There are a number of changes to Tarion's structure, processes and documentation commencing 2021 that require the attention of developers. This alert will summarize some of those items effective February 1, 2021 that developers should take note of as new documentation will be required to be used for new sales and project launches.
On February 1, 2021, the New Home Construction Licencing Act, 2017 comes into force, creating the Home Construction Regulatory Authority (HCRA). The HCRA will act as a new regulating authority for homebuilders in Ontario under both the New Home Construction Licensing Act, 2017 and the existing Ontario New Home Warranties Plan Act (ONHWPA) with respect to the licencing and regulating of builders and vendors. Note that the Tarion Warranty Corporation (Tarion) created under the ONHWPA will continue to be responsible for administering new home warranties under the ONHWPA.
In connection with the transition to the HCRA of the responsibility for builder/vendor licencing, the HCRA is in the process of reviewing and revising existing Tarion bulletins, guidelines and required documentation. This revised documentation will be published over the coming months on the HCRA website. It is anticipated that the HCRA will be closely reviewing registration requirements (Tarion Builder Bulletins 26, 30R and 35) and will be implementing revised protocols and requirements. We will update you as these revised processes and documentation become available.
The HCRA has published a new fee schedule effective February 1, 2021 in connection with its authority over licencing and registration which effectively increases new licence registration and late renewal fees.
In addition to registration fees, effective February 1, 2021, the HCRA will charge a $145 per home Regulatory Oversight Fee. This Regulatory Oversight Fee will be payable at the same time as the new home enrolment fees, which must be paid to enrol each new home with Tarion before pulling the building permit for the project. According to the HCRA, these new fees will assist the HCRA to monitor licensed builders and vendors, identify and take action against illegal or unethical builders, manage the complaints process for consumers and provide educational materials for the industry. Tarion's new home enrolment fees will be reduced by $55 per home to partially offset this new HCRA fee.
TRANSITION FOR OPEN RENEWALS
Tarion has advised that any open vendor/builder renewals will be sent a transition terms and conditions letter prior to February 1, 2021 to allow Tarion to continue completion of the renewal and before the renewal file moves over to HCRA. Vendors/Builders may be asked to sign back this letter. Readers should be aware that these letters may state that the vendor/builder has a "NIL" limit for sales rather than the actual permitted number of units being proposed. We do not recommend that this letter be signed back and have ongoing discussions with Tarion regarding same to ensure our clients' sales programs remain unaffected.
NEW ADDITIONS FOR ALL AGREEMENTS OF PURCHASE AND SALE
On December 1, 2020, Tarion issued warranty information summary sheets that are required to be attached to every new home agreement of purchase and sale commencing February 1, 2021 (note there are different forms for freehold or condominium, contract home, conversion condo unit, vacant land condo unit or parcel of tied land for common element condos). These additional pages provide the purchaser with a summary of the warranties applicable to the unit being purchased.
Tarion has further issued updated Addendum and Statement of Critical Dates forms which are required to be attached to all new agreements of purchase and sale commencing February 1, 2021. These new forms (for each of freehold and condominium, tentative and firm occupancy dates as well as common element condominium interests) are available on the Tarion website.
Readers are reminded that the new Addendum and Statement of Critical Dates goes along with the Condo Information Sheet that became a mandatory first page addition to all agreements of purchase and sale for projects launched on or after January 1, 2020, as well as the new Condo Guide issued by the Condominium Authority of Ontario that became a mandatory delivery to all purchasers of new homes on or after January 1, 2021, and the new Warranty Information Sheet that must be attached to all new home agreements commencing February 1, 2021.
NEW VENDOR/BUILDER AGREEMENTS
An updated form of vendor and builder agreement is in the process of being finalized and made ready for use effective February 1, 2021 through the HCRA for new vendor/builder registrations. A summary of substantive changes will follow in a future alert.
OPEN COMPLAINTS TO TARION
All open complaints regarding professional standards of builders and vendors (but not warranty issues) that were filed with Tarion before February 1, 2021 will be transitioned to the HCRA for completion. The HCRA has provided further information with respect to the complaint process in its Consumer Complaints Guideline.
The HCRA has published a Licensing and Compliance Guideline to assist new vendors/builders with preparing for some of these upcoming changes.
We will continue to monitor new developments in this area. Please contact a member of the Aird & Berlis Real Estate Group for further information about legislative changes that may affect your developments.
Originally Published by Aird & Berlis, January 2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.