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Archive for September, 2016

Home inspectors welcome fresh attempt to regulate

Minister expected to introduce new legislation to license home inspectors

Ontario’s largest association of home inspectors is welcoming the provincial government’s plan to regulate the industry.

Currently, inspectors in Ontario can become an RHI (Registered Home Inspector), but not licensed home inspectors, as is the case in Alberta and British Columbia.

“Some are qualified, some aren’t,” said Peter Weeks, a registered home inspector in Ottawa. “Anybody can start tomorrow, print a card, and they’re a home inspector.”

On Wednesday, Consumer Services Minister Marie-France Lalonde announced her government will introduce legislation this fall to regulate the industry.

In response, the Ontario Association of Home Inspectors (OAHI) issued a written statement saying its members support “the establishment of common competency requirements for home inspectors,” and are looking forward to reviewing the draft legislation.

Minimum training needed

Weeks, who is a member of OAHI, believes regulating the industry would help address two big concerns. “Education, that’s one of the biggest things. And dealing with insurance by making sure there’s enough coverage for both the consumer and the home inspector,” said Weeks.

Ottawa’s Algonquin College offers a 40-hour, 10-course home inspector program, including one course focusing on communication.

“It’s excellent for you to have knowledge and be able to observe things, but it’s more important that you can communicate to your client what they need to do about it if it’s a problem, and how soon they need to act on it,” said instructor Michael Levitan.

Not first stab at regulation

Ontario has mulled regulating home inspectors in the past. In December 2013, a panel commissioned by the Ministry of Consumer Services made 35 recommendations to establish minimum qualifications for home inspectors, including the introduction of licensing. A year later, the then minister acknowledged the industry lacked regulation.

In April 2016, Liberal MPP Han Dong introduced a private member’s bill to license home inspectors, but it never made it past committee.

This time around the minister herself plans to introduce the legislation, a fact that Weeks says gives him hope. “Absolutely, I think this one’s gonna run.”

We shall see!


Tarion needs to increase homebuyers’ deposit protection

Tarion’s limit for deposit protection — $20,000 on condos and $40,000 on homes — hasn’t changed in years.  An interim report on the Tarion warranty corporation should have gone further to protect home buyers’ purchase deposits. A special adviser, in releasing the initial report of the independent review, last week told the Toronto Star he didn’t “know enough about it quite frankly to make a comment.”

That must be disappointing to the unlucky purchasers left in fear of losing their deposits following the bankruptcy restructuring of developer Urbancorp.

Tarion’s limit for deposit protection is fixed at $20,000 on condominiums and $40,000 on homes. This protection hasn’t been changed in years, while home prices and deposit amounts have skyrocketed.

Back in June, I suggested Tarion deposit protection should be increased to $200,000 on all purchases, whether freehold or condominium.

Tarion fired back on its website, saying my view “has been advanced without any supporting research on actual claims data. Tarion regularly monitors all of our claims data to ensure the warranty remains effective. Last year, we reviewed deposit claims over a five-year period and found that the average claim was only $29,000 — well within the $40,000 limit.”

The key word in Tarion’s rebuttal is “average.” No mention was made of the largest claims, or those in excess of the deposit protection, or the total amount of consumer losses.

Tarion added that raising the limits of Ontario’s deposit warranty would “very likely” result in a significant enrolment fee increase for all new homes across the province, and could have the unintended consequence of increasing deposit amounts requested by builders.

In my view, one consumer loss is too many.

The Urbancorp disaster is not unique. In 2003, two dozen buyers purchased units in Jarvis Mansions, at 539 Jarvis St. Four years later, developer Panterra Mansions went into receivership with some of the units virtually completed. The purchase agreements were terminated, and although the purchasers received their deposits back, they got nothing for the thousands of dollars they had spent in upgrades. As well, they all lost four years of appreciation in value representing tens of thousands of dollars per unit.

Back in 2009, I wrote about a couple who signed an agreement to buy a condominium in Parry Sound, and handed the builder a deposit of $40,000. Tarion only covered $20,000. Together, three purchasers lost a total of $76,000.

Two years ago, Toronto lawyer Meerai Cho was charged with 426 counts of fraud after $14.9 million in deposits was released to developer Joseph Lee and Centrium Development Group. A total of 180 residential purchasers had to go to court to get back $9 million in deposits, but there was no protection for the buyers of the commercial units.

Financial problems in condo developments are not uncommon. The Whitby Yacht Club development, Queen West Vintage Lofts and Avante were all taken over by new developers. The purchase agreements were terminated, although the deposits were refunded.

Tarion and the Ontario government need to step up to the plate, increase deposit protection, and ensure that once an agreement is signed, it is binding on any developer who takes over the project.

With permission: Bob Aaron is a Toronto real-estate lawyer. He can be reached at bob@aaron.ca on his website aaron.ca.

 Note from Robert: Although Bob Aaron’s articles are primarily based on Toronto issues, I have selected them because they are relevant to everyone in Ontario.


Rental laws need an overhaul


How many times do Ontario judges have to cry out for changes to the landlord and tenant court procedure to prevent tenants from “gaming the system” before the rules are changed?

The question arises in the wake of an April decision of the Divisional Court in which Justice David Broad called for legislative changes to stop unethical tenants from misusing the court system to obtain months of uncollectable free rent from their landlords.

Back in September 2015, a company rented an apartment to Jeffrey Mason for $1,700 per month. The only payment that ever cleared was for the first month of the tenancy. No further payments were made.

In November, the landlord filed an eviction application with the Landlord and Tenant Board. At the hearing in January 2016, the tenancy was terminated and the tenant ordered to vacate the unit. On the last day before the eviction could take place, the tenant filed an appeal.

When the Divisional Court hearing took place in April, the landlord disclosed that the tenant’s previous landlord had been in court on a similar set of circumstances in May 2015.

In the earlier case, Justice David Corbett noted that Mason had been “gaming the system” to live virtually rent free in premises, first with one landlord, and later on with another. He quashed the tenant’s appeal and ordered him to vacate the unit.

In the first case, Justice Broad wrote that “the inappropriate behaviour of the (tenant) in ‘gaming the system’ should be discouraged and sanctioned” by an award of costs of $5,639. The total amount owing including costs was $16,786 and the chances of recovery are typically slim.

In his reasons, Justice Broad added his own voice to the words of Justice Ted Matlow in the 2012 decision of D’Amico v. Hitti, when he wrote:

“It is my hope that those in a position to amend the Rules of this Court will consider this judgment and see fit to restrict the right of appeal in residential landlord and tenant cases and, perhaps, require that leave (permission) to appeal be obtained before appeals can be brought.”

In recent years,  the escapades of Nina Willis, a professional tenant who has battled with eight different landlords before the courts and the Landlord and Tenant Board, eventually winding up with a six month jail term and a year of probation for fraud.

It is tenants like Willis, Mason and Hitti who are gaming the system, making a mockery of the court process and causing serious financial harm to landlords.

The rules of court in Ontario are established by a committee of 29 members including judges, lawyers, representatives of court services and members of the private bar. Four of the members are appointed by the Attorney General, who is presently Yasir Naqvi.

In order for the public to have confidence in the integrity of the justice system, the rules committee needs to undertake a serious overhaul of landlord and tenant procedures. At the very minimum:

  • Tenants should be required to obtain permission before appealing an eviction order. The automatic right to appeal, especially on frivolous grounds where the tenant remains in default, must be terminated, by legislation if necessary.
  • Names of the parties in hearings before the Landlord and Tenant Board must be made public so landlords can keep track of the bad apples. At present, tenant names are only made public on appeals.
  • Private bailiffs should be able to represent landlords on evictions since some of the local sheriff’s offices are so backlogged and expensive.

Bob Aaron is a Toronto real-estate lawyer. He can be reached at bob@aaron.ca , on his website aaron.ca and on Twitter @bobaaron2.