The Government of Ontario will crack down on house and condominium developers unjustifiably cancelling or increasing the price of pre-construction sales agreements, Minister of Government and Consumer Services Ross Romano confirmed on Thursday.
Developers found to be breaching these ethics rules will face heftier fines than are currently in place, as well as the possibility of a suspended license.
“Last November, Premier Ford vowed to protect condo buyers from developers trying to make extra money off the backs of hard-working people,” Romano said. “Our government is following through on that promise to crack down on bad actors and defend future homeowners from the unethical and egregious practice of unfairly cancelling pre-construction projects.”
Under the new regulations, developers would be required to disclose to Ontario’s Home Construction Regulation Authority (HCRA) — the regulatory body that licenses home builders and vendors in the province — all instances when sales are cancelled without fault of the buyer. They must also provide the reason for cancellation. Developers found to be extorting more money out of buyers who have already signed sales agreements could have their operating license suspended for up to two years.
Under current regulations, the HCRA’s disciplinary committee can impose a maximum fine of $25,000 for individuals and $50,000 for corporations, but the Ford government is now planning to double the maximums for both. But for repeat offenders, there would be no limits placed on fines.
“For the first time, past behaviour and offences will be considered when assessing unethical behaviour and handing out fines and penalties,” Romano said.
The provincial government will also allow the HCRA to launch its own investigations into Ontario developers’ business practices, something Romano says will help in “speeding up the process for consumers to get answers.” Currently, the HCRA may only investigate in response to formally filed complaints. The province is also looking to protect buyers in the event of cancellations by requiring that developers return buyers’ deposits to them with interest at the Bank of Canada rate.
“With these changes, developers looking to make a quick buck will think twice before trying to take advantage of hard-working Ontarians,” Romano said.
In response to the new penalties, the Building Industry and Land Development Association (BILD) noted that the measures must give proper consideration to the balance between consumer protection and valid cancellations.
“The Building Industry and Land Development Association welcomes the opportunity to be included in any consultations on proposed new rules regarding the cancellation of condominium projects,” BILD said in a statement. “Any measures that are contemplated must balance additional consumer protection with the understanding that cancellations of condominium projects do occur, from time to time, for economic, approval and business reasons.
The province’s announcement comes just months after an Ontario developer was found to have cancelled dozens of sales contracts for under-construction condo units in Barrie in an attempt to get buyers to pay more. That same month, a developer in Tillsonburg was hit with a lawsuit from 11 buyers after the company attempted to increase its condo prices by 25% one year after the sales agreements had been signed. In November, an Ontario Superior Court judge gave the Tillsonburg buyers a small win, granting them a certificate of pending litigation, effectively preventing the developer from reselling the homes.
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