The Ministry of Public and Business Service Delivery has proposed amendments to the New Home Construction Licensing Act, 2017 (Licensing Act). If passed, these amendments will increase fines for developers and builders who unjustly terminate a purchase agreement or new home project.
Under the proposed changes, the maximum financial penalty per infraction would double from $25,000 to $50,000, with no limit on additional monetary benefit penalties. The fines for subsequent offences are proposed to be capped at $100,000 for individuals and $500,000 for corporations. Additionally, two years in prison is a possibility for repeat individual offenders.
Under the proposed amendments, unethical builders and developers could soon be liable for hundreds of thousands of dollars for each unfairly cancelled contract. Developers in violation also run the risk of losing their builder's license permanently.
The Home Construction Regulatory Authority (HCRA) regulates builders and vendors of new homes, holding them to professional standards and requiring compliance with a mandatory code of ethics.
If amended, the HCRA's enforcement powers would be enhanced, enabling the HCRA to impose fines retroactively so long as the infraction occurred on or after April 14, 2022—the date the More Homes for Everyone Act received Royal Assent. Furthermore, the HCRA would be empowered to distribute the proceeds of such violations to adversely impacted purchasers, making Ontario the first jurisdiction in Canada to provide this kind of compensation.
The government has stated that the proposed legislative amendments are not expected to create a burden on the new home construction sector but rather aim to deter predatory behaviour. This is because builders and vendors should be adhering to the requirements and rules currently set out under the Licensing Act and its regulations.
If the proposal is passed, new home buyers in Ontario will have greater protection, which the government believes will restore the trust and confidence of purchasers facing the province's housing supply crisis.
Should you require any support or further information regarding this subject, our Real Estate group will be happy to assist.