The extraordinary measures Ontario’s new homes regulator is taking to deal with a Toronto builder with a history of sanctions highlight the challenge posed by unlicensed builders.
On March 19, the Home Construction Regulatory Authority (HCRA) froze the assets of Albion Building Consultant Inc. Court documents said that an investigation found evidence that the company took money for as many as 53 separate homes in Toronto it did not have the proper licences to build or sell.
The number of homes allegedly illegally built by Albion is several times larger than previously believed, which the HCRA said prompted it to invoke rarely used powers.
The freezing of assets was not punitive, but “to hold any purchaser funds in trust … to prohibit [Albion] from transferring any assets [and] to preserve the deposits for the benefit of homebuyers,” said Wendy Moir, the HCRA’s chief executive officer and registrar.
Ontario’s new home regulations are split between two delegated authorities, HCRA and Tarion. HCRA, which was launched in 2021, licenses builders and polices their conduct. Tarion approves the number of homes a builder can enroll in its home warranty program, an insurance pool that protects new home deposits and serves as a backstop for builder defect complaints.
If homes are built or sold without licences, they cannot be enrolled in the Tarion program, limiting the buyers’ recourse in the event of defaults by the builder.
“The HCRA is taking appropriate action to protect the public and send a clear message to the industry that those who act unlawfully or unethically will be held accountable,” said Ms. Moir.
The principals of Albion – Zamal Hossain and his wife Farida Haque – have already been convicted four times for regulatory offences related to 16 homes built without licences between 2016 and 2022. But in a search warrant application the HCRA filed on Feb. 20 with the Ontario Court of Justice, the agency outlines dozens of other new-build homes Albion is alleged to have sold or constructed. Those allegations have yet to be proven in court.
The warrant is only the second one the relatively new agency has served. It allowed investigators to comb through Albion’s office at 3028 Danforth Ave. in Toronto for any records of contracts and agreements with buyers about the homes, contracts with trades and subtrades, contact information for the new home purchasers and any correspondence between Albion and purchasers about the new homes.
“We got a lot of information from them – a van full of documents,” said Ms. Moir. “We have hundreds of documents to go through,” she said. “This is one of our largest investigations.”
Albion’s business has been to tear down a single detached home, split the lot and then construct two new homes on the old site. The HCRA warrant suggests the majority of the 53 suspected unlicensed homes are lot-splits located mainly in Scarborough. It’s unclear as yet how many homes the company actually completed.
In the past, Tarion extended a licence to build homes to Mr. Hossain and Albion, but limited the number of new homes he was allowed to enroll into its insurance program.
The evidence HCRA submitted for the search warrant suggests that the actual number of unlicensed homes built by Albion was several times higher than Mr. Hossain admitted.
Mr. Hossain didn’t respond to requests for comment for this story, but in 2023 he offered this comment to The Globe on his previous convictions: “Yes I broke the law. I did the house without the Tarion [new home warranty]. … I didn’t murder anybody.”
According to Ms. Moir, there’s no clear tally of how many unlicensed builders there are in the province. She notes that it is not illegal to build your own home without a licence. But if you hire a contractor to do it, they must be licensed.
“We’ve seen an 80-per-cent increase in illegal building complaints since last year,” she said. “I don’t think it’s more illegal building, we think it’s more awareness.”
Neil Rodgers, Interim CEO of the Ontario Home Builders Association, said the Albion case puts a spotlight on the need for regulatory fixes to tackle illegal vending where an unlicensed builder takes deposits to build homes they aren’t entitled to sell or build.
“There has to be a pro-active regulatory regime,” said Mr. Rodgers. “There needs to be a system put in place that allows for what I’m going to call early warning tracking, whereby purchasers or their agents or their solicitors could register their agreements of purchase and sale with HCRA or Tarion. If there’s a pattern that’s emerging it gives the regulator an opportunity to intervene much faster.”
Mr. Rodgers likens this requirement on buyers to share details of their agreement of purchase and sale’s with HCRA or another agency as similar to mailing a warranty card for an electronic appliance, and says he’s calling on the province for consultations on changes to the requirements.
Karen Somerville of the consumer lobby group Canadians for Properly Built Homes (CPBH) doesn’t agree the burden should be on consumers to identify unlicensed builders, and points to a different screening where there’s already been pilot programs in the past: construction permitting.
“CPBH proposes that the municipality has the responsibility to notify HCRA given the information available in the building permit application,” Ms. Somerville said. “This would result in government organizations working together using information they already have to identify unlicensed builders.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
