In a recent special report, the Auditor General of Ontario criticized Tarion Warranty Corporation’s management of the Tarion Warranty Program after finding that Tarion did not effectively carry out its role to enforce home warranties and to regulate builders. The report concluded that Tarion’s processes and practices favoured home builders over home-buying consumers, which resulted in a frustrating and costly experience for many homeowners.
Following is a list of some of the report’s findings:
- Requiring homeowners to submit a form to Tarion only during the first 30 days and the last 30 days of the first year of occupancy is overly restrictive. As a result, between 2014 and 2018 Tarion refused to assist about 9,700 homeowners because they had missed the deadlines, with about 1,300 homeowners missing the deadline by one day.
- The process for builders to satisfy warranty claims could take up to 18 months, which is an unreasonably long time period.
- Tarion’s role is confusing to consumers as the Tarion Homeowner Information Package creates an incorrect impression that Tarion is providing the warranty, when in reality it is the builder providing the warranty and Tarion’s job is to enforce the warranties.
- Builders who had refused to honour warranties were able to renew their registration and builders whose licences had been revoked were able to get a new licence by creating a new corporation or partnering with an existing registered builder.
- Tarion senior management was rewarded for increasing profits and minimizing payouts to homeowners. Management received hefty bonuses totalling 30% to 60% of their annual salaries. This approach was seen to be inappropriate for a government-delegated not-for-profit corporation with a consumer protection mandate.
- Two-thirds of Tarion staff who inspect defects and determine whether builders should have repaired them under their warranties do not have the appropriate qualifications to make these determinations.
- The Ontario Builder Directory maintained by Tarion does not provide buyers with complete information about builders’ poor warranty history and past convictions for illegally building homes. (Note that as we reported in a prior blog post, Tarion has recently updated the Ontario Builder Directory and the changes made address these concerns.)
- The Ontario Homebuilders’ Association, which represents residential homebuilders, has disproportionate influence over Tarion’s decisions and operations.
- Tarion’s operations require more government oversight.
The report contains 32 recommendations with 76 action items to address the audit findings. Click here to read the report.
