Ontario proposes doubling maximum fines for unethical builders in effort to protect new home buyers

By Amanda Jerome

Law360 Canada (October 20, 2022, 12:50 PM EDT) -- The Ontario government plans to double the “maximum fines for unethical builders and vendors of new homes who unfairly cancel a new home project or terminate a purchase agreement” in an effort to protect buyers.

According to a government release, issued Oct. 20, proposed changes to the New Home Construction Licensing Act (NHCLA), would “increase existing maximum financial penalties from $25,000 to $50,000 per infraction, with no limit to additional monetary benefit penalties.”

If the proposed changes are passed, “unscrupulous developers could now be on the hook for hundreds of thousands of dollars in fines for each unfairly cancelled contract” and “unethical developers who engage in these practices could also face the risk of permanently losing their builder’s licence,” the release explained.

Kaleed Rasheed, the minister of public and business service delivery, said “with these stiffer penalties,” the government is “cracking down on bad actors and taking a zero-tolerance approach to unethical and illegal behaviour by builders and vendors of pre-construction projects.”

According to the release, the proposed changes will “also enable the Home Construction Regulatory Authority (HCRA) to use the money received from these penalties to make payments back directly to consumers who have been adversely affected by builders and vendors who break the law.”

This would make Ontario the “first jurisdiction in Canada to provide such compensation to consumers,” the release added.

“Instead of profiting on bad behaviour, they will face hundreds of thousands of dollars in fines that will go back into the pockets of their victims,” Rasheed emphasized in a statement.

Steve Clark, the minister of municipal affairs and housing, noted that the government’s announcement makes “clear that illegal and predatory behaviour on the part of developers will not be tolerated, full stop.”

“Once proclaimed into force,” the release added, the HCRA would “have the authority to impose financial penalties retroactively to contraventions that occurred on or after April 14, 2022 — the date the More Homes for Everyone Act received Royal Assent.”

The government, the release noted, is “also doubling maximum financial penalties for repeat offenders of the NHCLA, with individuals now facing charges of $100,000 and corporations of $500,000, up from $50,000 and $250,000 respectively. Individuals found guilty may also face a sentence of up to two years in prison.”

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