Holding Illegal Builders Accountable: What Happens Next?

Illegal building and selling are major consumer protection issues in Ontario and top priorities for the Home Construction Regulatory Authority (HCRA). When builders and sellers operate without a licence, it puts consumers at risk and creates an unfair playing field in the homebuilding industry.

What is illegal building and selling?

Illegal building and selling fall into three main categories:

1. Building a new home without being a licensed builder.
2. Selling a new, unoccupied home without a licence, including 'flipping' a never-lived-in home. Even if the home was purchased from a licensed builder, the owner can’t resell it without a licence if it was never occupied.
3. Building or selling a new home that has not been approved by Tarion or enrolled in the warranty plan.

By law, anyone involved in building or selling new homes must be licensed by the HCRA. Upon obtaining a licence from the HCRA, builders and sellers must also apply to Tarion to approve and enrol the home in the warranty plan. If either of these steps is not successfully completed, it is illegal.

How does this impact homebuyers and homeowners?

Illegal building and selling are serious offences. Unlike licensed builders, who meet strict competency and conduct standards through the HCRA’s licensing process, unlicensed builders and sellers lack proven qualifications and operate illegally. This exposes consumers to significant risks including structural defects, poor-quality construction, potential impacts to warranty protection, and working with dishonest individuals.

What is the HCRA doing to combat illegal building and selling?

As the regulator, the HCRA has the authority to take strong enforcement actions against illegal building and selling. This includes imposing administrative penalties, which are like fines, and/or charging individuals and companies in provincial court. For example, an unlicensed builder was recently fined $75,000 and ordered to pay over $194,000 in restitution to the homeowners impacted by his illegal activity and unlawful conduct.

Combatting illegal building and selling is a top priority for the HCRA. Over the past year, we’ve expanded our Investigations team and are utilizing all available regulatory tools to curb illegal activity. This includes issuing search warrants, freezing assets of illegal builders, and laying provincial charges for violations, with escalating penalties for repeat offenders.

We also educate the public about these matters through news releases and other communications to deter wrongdoing and bring more awareness around the issue.

The HCRA also collaborates with municipalities, building officials, real estate professionals, and other regulatory bodies to strengthen the integrity of the homebuilding industry. All of these stakeholders play an essential role in the homebuying journey and by working together, we ensure consumers are informed and confident when making one of the biggest purchases of their lives – a new home.

In addition to enforcement, the HCRA promotes voluntary compliance. We’ve successfully encouraged several unlicensed builders to apply for a licence with the HCRA and register their projects with Tarion. For example, after discovering a rogue builder had illegally constructed eight homes, the HCRA offered the builder the chance to apply for a licence and enrol the homes with Tarion. The builder complied, demonstrated the required competencies to operate legally, and became licensed. While cracking down on illegal builders and sellers, the HCRA continues to support the vast majority of licensed builders who provide quality service to their customers.

How can you protect yourself?

Working with unlicensed individuals or companies puts you at risk of dealing with unethical behaviour or poor conduct. The best way to protect yourself is to check if a builder or seller is licensed by the HCRA before signing a contract.

• Search for a builder in the Ontario Builder Directory to confirm their licence.
• Call the HCRA Call Centre at 416-487-HCRA (4272) or toll-free at 1-800-582-7994 to verify the builder’s licence.

The Ontario Builder Directory provides essential information about Ontario’s 7,000 new home builders and sellers. It is regularly updated with details on builders' licensing statuses and any conduct issues, including charges or convictions. It’s an essential first step for anyone involved in the homebuying process.

See something, say something!

If you suspect a builder is unlicensed, report your concerns to the HCRA.