Ontario makes consumer protection proposal but leaves more to be desired

By HUB SmartCoverage Team on October 19th, 2017

The Ontario government recently introduced Bill 166, the Strengthening Protection for Ontario Consumers Act, 2017. It is a piece of legislation that aims to separate the provider of the province's new home warranty program from its regulator of new homebuilders; and in doing so, establishing an administrative authority for each.

In the draft, however, there is no mention of amendments to the level of deposit protection—a matter that is of great importance to consumers. Currently, the only protection that is in place is provided by Tarion, the regulator of Ontario's new home building industry. Tarion protects buyer deposits of up to $20,000 on new condominiums and up to $40,000 on new homes, figures that were established in 2003.

A lot has changed since then. Toronto home prices have skyrocketed in the past two years—let alone the dozen that preceded them—and the protection amounts are hardly proportional to the deposits that house and condo buyers are asked to make.

This leaves consumers in an awkward position. Unless they can secure deposit protection privately, they will be left exposed to the especially vulnerable building sector. One builder that has stepped up in that regard is Great Gulf, which has vowed to insure whatever isn't covered by Tarion.

Still, it appears that before Bill 166 is passed into law, the ruling Liberals may further study a recommendation to implement a multi-provider insurance system for new home warranties. If so, that would bring about some interesting changes—and perhaps better serve the sort of function that Tarion presumably provides already.

"Tarion is providing an insurance-type product to homeowners but neither Tarion nor the warranty protection are subject to the oversight that would ordinarily apply to an insurance company delivering a similar insurance product," wrote J. Douglas Cunningham, the former associate chief justice of the Ontario Superior Court who was tasked with reviewing the province's home warranty system and Tarion.

Even with new proposed legislation, it does not feel like a resolution to this issue is imminent. And with a provincial election looming, perhaps it will be on voters' radars come next spring.

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