Hidden costs are just some of the undesirable aspects of these kinds of properties
In commemoration of Fraud Prevention Month, Tarion Warranty Corporation has warned would-be house buyers in Ontario that an illegally built home will not only be unsafe, but also come with the possibility that a builder will simply abandon the project altogether upon getting paid.
These homes are also a pain in the wallet, Tarion noted.
“When it comes to the largest investment of a family's life, namely a newly built home, it pays to know that your builder has the technical and financial wherewithal to complete the job and that you have the protection of a warranty if anything goes wrong,” Tarion president and CEO Howard Bogach said.
Bogach added that according to law, every builder in Ontario must be registered with Tarion and must enroll all newly built homes in the warranty program. Municipalities across the province also share their building permit information with Tarion.
Read more: Mortgage fraud could increase next year
The Tarion executive warned that unregistered builders do not necessarily comply with Ontario Building Code specifications, and the new owner can fall victim to shoddy craftsmanship, including dangerous and costly elements such as faulty electricity and plumbing.
Bogach stressed that prospective buyers of new homes need to recognize the signs that a builder might be operating illegally, including:
- A builder saying that they built the house for themselves but then decided to sell it
- A builder saying they offer their own warranty and the homeowner doesn't need Tarion’s warranty
- A builder arguing that the Tarion warranty is too costly (sometimes quoting $10,000 when in fact the maximum cost is $1800 plus taxes.)
- A builder offering the consumer a brief contract or, worse, no contract at all
Last year alone, Ontario provincial courts gave 117 convictions related to illegal building, and illegal builders paid almost $400,000 in fines for proceeding without proper registration, warranties, or permits. In 2016, one builder even went to jail.
