December 14, 2016
The Honourable Marie-France Lalonde
Minister of Government and Consumer Services
6th Floor, Mowat Block
900 Bay Street
Toronto ON M7A 1L2

Dear Minister Lalonde:

I am pleased to submit this Final Report of my review of the Ontario New Home Warranties Plan Act and the Tarion Warranty Corporation.

I have approached this review with an open mind and with no preconceived ideas on what a new home warranty program should look like. I have listened to and engaged directly with many individuals with an interest in Ontario’s warranty program. I have read the many submissions received during the review. I have learned a great deal about the complexities of new home construction and about the different roles of builders, lenders, municipalities and others. I have become familiar with how other jurisdictions deliver new home warranty protection and builder regulation and with the actual experiences of homeowners, builders and those who work to deliver the warranty protection. And, I have heard about the challenges faced when there is a dispute over warranty coverage.

In today’s modern regulatory context there are many viable models for regulating a sector, on a spectrum from direct government regulation to private body self-regulation. Each model will have its own validity with advantages and disadvantages. It can sometimes be difficult to identify one model as necessarily better than another.

In this review of Ontario’s new home warranty program, I was faced with the current reality of a corporation, Tarion, and legislation, the Ontario New Home Warranties Plan Act, which have been in place for over 40 years. Tarion continues to operate in a structural framework established in legislation that is 40 years old. That structural framework has assigned it multiple roles from rule-making to adjudication. Inevitably, this framework has given rise to real and perceived conflicts of interest and has presented it with challenges in fulfilling its multiple roles. Notwithstanding the challenges, Ontario, through Tarion, has endeavoured to deliver strong consumer protections for new home buyers.

The regulatory environment for new home construction is complex with multiple layers of oversight from a wide range of players and across an equally wide range of subject matter. The regulation of builders and vendors and the provision of new home warranty protection are but two aspects of that broader regulatory context. Many players including professional regulators, oversight bodies, manufacturers, insurance providers, construction standards organizations and municipalities have, and will continue to have, an important role to play in supporting the broader outcomes of consumer protection and quality home construction in Ontario. New home warranty protection and builder and vendor regulation are two important components of that broader context.

The extensive input I have received and my analysis lead me to believe that there is room for considerable improvement, including with the legislation itself. This improvement can best be achieved with significant change to how the new home warranty protections are delivered and how builders and vendors are regulated.   

This Final Report makes recommendations on the new home warranty legislation and how it can be delivered, to best support strong consumer protection and high quality residential construction in Ontario.

I would like to take this opportunity to acknowledge the hard work of your ministry’s staff in supporting me throughout the review. I would also like to thank you for the opportunity to undertake this important and timely review, and would be pleased to meet with you at your request.

Sincerely,

The Honourable J. Douglas Cunningham Q.C.