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Want to build a house? Better have a warranty

Greater Sudbury is one of six communities in Ontario testing a provincial strategy to help protect new home buyers from being caught up in the potential pitfalls of an illegal home build.
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Greater Sudbury is one of six Ontario communities participating in a pilot project aimed at putting a dent in the number of illegal home builds in the province. Supplied photo
Greater Sudbury is one of six communities in Ontario testing a provincial strategy to help protect new home buyers from being caught up in the potential pitfalls of an illegal home build.

What is an illegal build? 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. This means they can offer cheaper rates than a registered builder, but it puts new homeowners at risk because the work is not backed up.

So, starting July 1, applicants for a home-building permit must present either their Tarion Warranty Corporation registration number or a letter of confirmation to obtain a permit through Building Services.

It's either that, or no permit for you.

“We welcome this partnership with Tarion and the Sudbury & District Home Builders’ Association to protect our residents,” said Guido Mazza, the city's chief building official. “While not common in our community, illegal home builds can result in financial loss and heartache for unsuspecting buyers. This new strategy gives us the tools and the resources to enforce warranty obligations.”

Although Mazza said illegal builds are "not common in our community," the local home builders association told NorthernLife.ca a year ago that the problem could be more common than people think.

Laura Higgs, executive officer with the Sudbury and District Home Builders' Association, said in August 2014 that 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 private home builders sometimes hire contractors they pay under the table, who should be registered with Tarion, but are not — and that is a statistic that is harder to pin down.

In 2012 (Tarion and home builders associations have been lobbying for several years for a program like this), Howard Bogach, president and CEO of Tarion, called it "a major problem in Sudbury."

Bogach said with nearly half the homes in the city being built with building permits taken out in the homeowner’s name (instead of the contractor's), homeowners should be aware of their risks.

Because the homeowner's name is on the permit, they will be liable for accidents or any other problems associated with the project.

“In the last few years, we’ve had to deal with some pretty serious situations (in Ontario),” Bogach said. “There was one where the entire home had to be lifted off its foundation, redo the fill, repour the basement, put the home back down, then redo the drywall.

“We’re talking about hundreds of thousands of dollars in repairs. So we do believe that consumers should know they require some form of protection along the way.”

The pilot program is good news, said Louie Zagordo, president of the Sudbury and District Home Builders Association, in a press release.

“On average, slightly less than half of new home permits are issued to private individuals,” Zagordo said. "This new strategy will support honest builders who work within rules and regulations, while preventing less scrupulous contractors from bypassing the process.”

As of July 1 in Ontario, anyone acting as a vendor/builder of a new home must be registered with Tarion to place the home under warranty automatically. Builders who are not registered, or who wish to exempt their obligations under the Ontario New Home Warranties Plan Act, must apply for a letter of confirmation from Tarion.

The news released issued by the city states the letter of confirmation may exempt builders from the need to register or from warranty obligations — if the applicant is building a home on their own land for personal occupation, a seasonal home or a home on more than 40 per cent of an existing foundation.

Applications to obtain a letter of confirmation from Tarion are available from Greater Sudbury Building Services at Tom Davies Square, 200 Brady St., or online at www.greatersudbury.ca/permits and www.tarion.com.

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