Province promises crackdown on condo-cancelling developers

Thestar.com
March 25, 2022
Tess Kalinowski

The Ontario government is planning new regulations, including fines and licence suspensions, to deter “unethical” home and condo developers from cancelling projects and purchase agreements, leaving buyers in the lurch.

Government and Consumer Services Minister, Ross Romano, said, on Thursday, he was imposing tough new measures to target “the most unethical behaviour of developers,” specifically those that cancel agreements to try and resell units at a higher price.

But some condo-buyers and critics say the new regulations aren’t enough to protect consumers from rich developers.

The new rules would double the fines levied by the Home Construction Regulatory Authority to $100,000 for corporations and $50,000 for individuals. There would be no maximum fine for repeat offenders.

The year-old regulatory body, which took over licencing of homebuilders from Tarion, would also have the authority to instigate investigations into problematic developer practices.

To date, it has only been allowed to investigate when it receives a complaint.

But it’s the threat of a two-year licence suspension that Romano said would be the biggest deterrent to builders trying to “take advantage of the little guy to try to make a buck on the backs of hardworking Ontarians.

“A developer will really think twice before potentially losing their licence to build for up to two years,” said Romano, “the risk is so significant.

“When somebody is going to purchase a condo (or home) … we want to ensure that they get what they paid for. They made a commitment to a certain price-point and they deserve to be able to have that honoured,” Romano told reporters at Queen’s Park.

But Patricia DeBartolo, who bought into the Icona condo project in Vaughan in 2017, only to have the project cancelled a year later, called the fines “a drop in the bucket.

“I just don’t think it’s enough,” DeBartolo said.

“I don’t know that it is going to deter developers from putting themselves in situations where they could have those fines levied against them. It’s nothing compared to the amount (developers) that they would be making if they were to cancel deals.”

She is leading a group of buyers in a court battle for compensation from Gupta Group.

DeBartolo says she’s skeptical that the proposed licence suspensions will stop developers building again under a new company name.

Under the government’s proposed regulations, buyers whose agreements are cancelled would be entitled to interest on their deposits equal to the Bank of Canada overnight rate, currently 0.5 per cent, for the full period in which the developer held their deposit. Under the old rules, consumers who had their deposits returned were allowed two per cent less than the bank rate. Interest rates have been so low in recent years, few buyers received interest on their money.

Many buyers said project cancellations put them years behind on the property ladder, because Toronto-area home prices have escalated so fast in the last six or seven years.

Deputy NDP Leader, Sara Singh, told reporters that, of 600 complaints filed last year, the Home Construction Regulatory Authority only cited charges against two companies.

“The cost of housing is out of control, and the lack of action from this government is helping those prices skyrocket,” Singh said.

“When people sign a contract in Ontario, they should get what they paid for, and the government should have their backs to ensure that bad actors aren’t taking advantage of homeowners.”

The regulatory authority, she added, “should have had these tools from the beginning …. We can double the fines, but if we’re not actually going to apply the fines and hold people accountable, the fines mean nothing.

“People across Ontario have lost hundreds of thousands of dollars,” said Singh.

The government says it hopes to have the new regulations in place soon, after a 30-day consultation period.