Illegal home builders can cost buyers thousands

Illegal home builders can cost new homeowners hundreds of thousands of dollars if something goes wrong with their new home.

That was the message the Ontario Home Builders' Association and Tarion Warranty Corporation brought to Sudbury Wednesday during a provincial tour to educate consumers about the provincial home warranty program, and the risks tied to illegal, and unregistered, home builders.

Professional home builders are legally required to register with Tarion, a provincial organization established in 1976 to manage obligatory warranties for new homes and enforce the Ontario New Warranty Plan Act.

When a home builder is registered with Tarion, their homes come with a seven-year comprehensive warranty that covers the entire home for the first year, and major structural defects, such as cracks in the foundation, for seven years.

Depending on the value of the home, the warranty can range from $350 to $1,500.
But illegal builders skirt the costs and responsibilities associated with Tarion membership, and put new homeowners at risk, said Vince Molinaro, incoming president of the Ontario Home Builders' Association.

“If they're doing that illegally, they're probably doing a bunch of other things illegally,” Molinaro said about unregistered home builders. “They're probably doing cash jobs and not remitting the proper taxes, which costs all of us. How can you trust somebody who's doing all these things?”

Illegal home builders, Molinaro said, may also not pay for workplace safety insurance, which puts the home buyer at financial risk if a worker is injured on the job.

The Ontario Home Builders' Association estimates around five per cent of new homes in the province are built illegally.

“This problem has always existed,” Molinaro said.

Laura Higgs, executive officer with the Sudbury and District Home Builders' Association, said around 43 per cent of Sudbury homes are privately built.

When an individual chooses to build their own home, they are exempted from having to purchase the Tarion new home warranty.

“If you're building your own house, and your intention is to live in it for the rest of your life, then it's not an issue,” Higgs said.

But the problem, she said, is that private home builders sometimes hire contractors they pay under the table, who should be registered with Tarion, but are not.

Phil Monkhouse, president of the Sudbury and District Home Builders' Association and owner of Monkhouse Homes, said he is often frustrated when he hears about home builders working under the table.

“It's kind of tough,” he said. “We're playing by the rules and some people just ignore them.”

To register with Tarion, contractors need to prove they have a strong understanding of the Ontario Building Code.

“If you want to build legally in Ontario you have to pass certain requirements, and show yourself to be competent both financially, and in terms of your knowledge,” said Christopher Spiteri, chair of Tarion's board of directors.

New home buyers can search the Tarion website for registered builders in their area. All members of the Sudbury and District Home Builders' Association are also registered with Tarion.