Ontario’s auditor general has issued a report with 32 recommendations for strengthening operations at the Tarion Warranty Corporation. The special audit, released earlier last week, criticized Tarion for ignoring thousands of requests from new homeowners who needed to resolve disputes with builders over defects, but missed restrictive deadlines.
“We found that the strong presence of homebuilders on the Tarion board of directors, combined with Tarion’s internal requirement that it seek advance consultation with the Ontario Homebuilder’s Association on any proposed changes to its regulations, created an imbalance at Tarion that favoured the interests of builders over homeowners,” said Auditor general Bonnie Lysyk.
Under the Ontario New Home Warranties Plan Act, builders must provide warranties on materials and workmanship for up to seven years on the new homes they construct. The cost of those warranties is usually factored into the selling price. Tarion is responsible to license builders and step in either with financial assistance or to arrange repairs when builders do not honour their warranties to new home buyers.
“Most new homebuyers and builders usually resolve most problems without the need for Tarion to intervene,” said Lysyk, “but in cases where builders do not honour their warranties, it was often difficult and time-consuming for homeowners to navigate Tarion’s processes.”
As a result of the audit, it was found that Tarion’s process could take 18 months before compensating a new home buyer for a builder’s defect. Tarion’s Home-owner Information Package was also deemed confusing because it leaves the incorrect impression that it is Tarion, rather than their builder, that provides warranty coverage.
Senior management, meanwhile, received bonuses of 30 to 60 per cent of their yearly salaries based on, for example, keeping operating costs down, including those at the call centre. The quality of service to the public is thus affected. The audit also found that Tarion continued to issue licences to builders with poor warranty records.
In a press release last week, Tarion said it is committed to continuous improvement and that it has taken steps to enhance protections for consumers. These include: enhanced disclosure for purchasers buying pre-construction condominiums, updates to the Ontario Builder Directory to help prospective buyers make informed decisions and public disclosure of compensation to improve transparency.
“The purchase of a new home is the most important investment that many Ontarians will make, which is why we’re constantly listening to consumers, builders, and other experts to explore improvements,” said Howard Bogach, chief executive officer of Tarion. “With this in mind, we thank the Auditor general for her recommendations and look forward to acting on them with the best interests of homeowners in mind.”
The Ministry of Government and Consumer Services has also confirmed that it will ensure the recommendations are addressed in a timely and responsive matter.