Behind the Tarion shield Disgruntled buyers turning up the heat on new home warranty program, Queen's Park

June 16, 2007
Gail Swainson
REAL ESTATE REPORTER

When Joe and Linda Sanginesi put a down payment on their new $390,000 Brampton home, they had two children. By the time they moved in 2 1/2 years later, their brood had doubled to four.

But Joe Sanginesi says the drawn-out closing and related $15,000 in unforeseen expenses turned out to be the least of their problems.
From sloping floors that sent furniture shimmying across the room, to mismatched windows book-ending the fireplace, Sanginesi says the couple's dream home had become a nightmare. And things went downhill from there, he maintains.

Because the couple paid more than $800 in warranty fees to Tarion – the private corporation that regulates Ontario builders and provides warranties on new houses and condos – they expected prompt action on their list of deficiencies. At one point, these numbered almost 100, Sanginesi claims.

The warranty program's side of this particular saga is unavailable because, Tarion spokesperson Rob Mitchell says, individual cases can't be discussed.

Sanginesi, meanwhile, says that more than two years after moving into their four-bedroom house in 2005, there are unresolved deficiencies and the couple will seek a resolution in civil court. Although the builder completed many repairs, Sanginesi says some items remain, including canted floors and bulging, out-of-square walls.

He traces the home's problems to a missing support post in the basement, which he says the builder initially neglected to install. The main floor was later jacked up to allow the post to be inserted, addressing some of the initial sagging. But, he says, the remedy led to crookedness in previously straight floors and walls in several rooms.

Now, Sanginesi claims he can put two fingers between the floor and a straight-held level in his 8-year-old daughter Sabrina's bedroom.

"Tarion said this is okay and acceptable and doesn't need to be repaired because in another part of the room, the wave is lower," says the owner of Weston Motors, adding that he believes such problems stem from the program's rock bottom warranty standards.

But Tarion's Mitchell takes issue with critics such as Sanginesi who say the warranty program's repair bar is set too low.

"I think the guidelines are very acceptable," Mitchell says. "One of the virtues of having a new home is this all-inclusive, bumper-to-bumper warranty. You're never going to have absolute perfection. These are houses; they don't roll off the assembly line like a car does."

He says there's a long and varied list of factors at play, such as how the house settles, how it is maintained and how it is heated. "Each home is unique," he says, adding that Tarion treats each complaint individually, "because no two homes are the same.

"Our objective is to always provide the best results for the consumer."

To that end, Mitchell says builders must pass stringent tests before being awarded licences to build in Ontario. "We really put them through a tough set of proficiency tests," he says.

Try telling that to Karen Somerville, president of an Ottawa-based, not-for-profit volunteer group called Canadians for Properly Built Homes. She says customer complaints made to her organization indicate far too many major structural issues remain unaddressed following complaints to Tarion.

"This is the largest purchase a consumer might make," Somerville says, "and Tarion is supposed to be there to help."

Somerville says Tarion consistently fails Ontario's new homebuyers, though when asked if there is a better program in another province or U.S. state, she said she didn't know of one offhand.

Government Services Minister Gerry Phillips, who oversees the legislation governing Tarion, says that in Canada, Ontario's program is second only to B.C.'s, which provides 10-year coverage period for structural defects. Coverage in Ontario lasts seven years.

"There are about 450,000 homes in the program and Tarion has been a model for other warranty programs," he says, adding that he is "working on making Tarion better" with a number of new initiatives.

These include implementing recommendations contained in a report released in February from a Tarion committee that examined delayed closings.

Chaired by Supreme Court Justice Frank Iacobucci the report recommends, among other things, that a closing date must be specified in the purchase agreement and that maximum limits be set between tentative and real closing dates – a pressing issue with many buyers.

Another study in the works will look at customer satisfaction with the warranty program.

"I do hear from people quite regularly who are unhappy with Tarion and I want to get an objective analysis," Phillips says.

"I don't want anyone to think that the status quo at Tarion is acceptable. It isn't."

Phillips says he is also reviewing the makeup of Tarion's 15-member board, to which the province appointed former Toronto Star reporter Harold Levy as a public representative earlier this month.

Levy, who retired from the Star last fall, received a citation at the National Newspaper Awards last month for a series of stories about homeowners victimized by title fraud artists. Those stories prompted the province to change the law, ensuring that title fraud victims are compensated within 90 days.

"As I have been appointed by the minister, I will do my best to forcefully articulate the voice and concerns of the public on the issues before the board," a statement from Levy says.

"Tarion exists to protect the consumer – the purchasers of new homes – and I am going to do my best to do just that along with the other directors."
Somerville expresses cautious optimism about Levy's appointment.

"CPBH regards Mr. Levy's appointment as a step in the right direction," she says. "However, there is much more to be done to ensure adequate consumer protection. Consumers continue to be significantly under-represented on the Tarion board."

Somerville's group has been lobbying the provincial government to bring in changes to the Ontario New Home Warranty Plan Act. The group recently told the province it wants to "transform Tarion into the consumer protection organization it is intended to be."

It wants to see:

A clear statement that Tarion's foremost role is to provide consumer protection to new homebuyers;

The number of builders or their representatives limited to one seat on the 15-member board (builders currently have eight);

Half the board come from incorporated Canadian consumer protection groups;

Expand the Ontario Ombudsman's mandate to include Tarion.
Somerville says one of her organization's biggest beefs is that half or more of the seats on Tarion's board are held by builders and developers.

Tarion's bylaws state that board members must come from a mix of the Ontario Home Builders' Association, consumer interests, financial institutions and the municipal or provincial levels of government.

Somerville's group wants those on the board to declare their interest in a "transparent fashion."

Phillips, meanwhile, says he's looking to find the right balance on the board, and that includes a significant say for builders.
"I don't agree with those who say that builders can't and don't represent the consumer well," Phillips says. "They work hard to satisfy their customers. "But if we find we need to put more consumer representatives on the board, we will."

Tarion says the province appoints five of its 15 board members and a nominations committee picks eight from a slate provided by the Ontario Home Builders' Association. In written responses to a series of questions from the Star, Tarion says individual board members "do not represent special interest groups. Rather, each director is required by law to act in the best interests of the corporation.

"Just as you would expect the board of a hospital to have significant representation from the medical community, Tarion's board has significant representation from the building industry," the statement adds. "Numbers of directors do not necessarily translate into bias."

Biased or not, Somerville says Tarion isn't doing enough to address construction deficiencies.

In some cases, she says, the non-stop worry has caused illness and severe financial woes for new homebuyers. "There are some really sad stories out there."
She says some owners, frustrated by an inability to get work done under the warranty plan, do patch-and-runs – cosmetic repairs that mask big problems to make a quick sale possible.

"They've patched it up and not disclosed – breaking the law – and most of them feel terrible about it," Somerville adds. "It puts the quality of some of our housing stock in question."

Somerville has had her own fight with Tarion. In 2000, she and husband Alan Greenberg bought a $443,500 custom-built home in Ottawa.
She says that after moving in, they found 130 problems, including building code violations, an undersized furnace and a leaky roof.

They were ultimately unhappy with how their builder and Tarion handled their complaints. As a result, even though the builder later repurchased the house for $550,000, matters are still before the courts and Somerville says she has to be careful when talking about the case.

Despite this, she says "we expected Tarion to help us, but found out there was no safety net."

But Phillips argues that – after the normal process had been exhausted – only 1 per cent of new homebuyers took issue last year with how Tarion addressed deficiencies.