How Licensing Protects Homeowners and Buyers

To build and sell new homes, builders in Ontario must be licensed by the HCRA – in fact, it’s the law. However, licensing is more than a legal requirement. It creates a fair marketplace and helps protect new home buyers from unsafe and unqualified builders.

The Logic Behind Licensing

Why is it important if a builder is licensed – isn’t this just red tape?

You should feel confident when purchasing a new home. After all, buying a home is one of the biggest investments you can make in your lifetime, and the HCRA’s licensing process helps ensure the homebuilding industry is made up of qualified builders who can safely and responsibly build your home.

Building homes requires a specific set of skills and expertise, and the HCRA requires builders to demonstrate seven core competencies as part of their licensing application – from financial planning management to demonstrated knowledge of Ontario’s Building Codes. When a builder is unlicensed, they have no legitimate way to prove they have the knowledge or expertise to build new homes. They are also not obligated to follow the expectations of good conduct in the Code of Ethics or the New Home Construction Licensing Act, 2017, that is required by all licensed builders. As a result, you could be working with dishonest, unethical people.

Also, if a builder doesn’t prove they have the financial responsibility or necessary insurance coverage in place, your investment could be at risk. You may also miss important warranty protections entitled to new home purchasers. These types of illegal builders pose a serious risk to the public.

To ensure your builder is properly licensed, the first step is to research them on the Ontario Builder Directory, which is a comprehensive database of Ontario’s 6,500+ licensees, including their licensing stats and conduct history. Always remember – if there’s no licence, say no deal. If you have a concern a builder is operating without a licence, contact the HCRA immediately.

The Ontario Builder Directory shows my builder has “conditions” on their licence – what does this mean?

The HCRA may impose conditions on a licence to prevent an identified risk and to support consumer protection. This may include, among other things, completion of further education. In these cases, the licence is still valid, but the builder must satisfy these conditions within a prescribed time.

Licensees must comply with actions taken by the HCRA, and if they fail to do so, the HCRA may take further action like suspending or revoking their licence completely.

I made a complaint about a builder, does the HCRA consider this when they renew their licence?

Yes, the HCRA tracks and records the conduct history of licensees. To protect new home buyers and limit bad actors from operating in the industry, the law requires builders to renew their licences annually so the HCRA can review their conduct history and any disciplinary action they have received (past or present).

If a builder has a record of professional misconduct, the HCRA will consider several factors as part of their licensing application including the severity and frequency of the misconduct.

This stage in the licensing process is critical to our consumer protection mandate. If a review of a licensee’s conduct suggests they may continue to break the rule or pose a risk to public safety, the HCRA may refuse to renew their licence.

If a builder had their licence revoked, what is stopping them from applying for a licence under a new company name?

Revoking a licence is a severe consequence but a necessary step at times to protect the public. Once a builder’s licence has been revoked, they cannot change their business or legal name to apply for and receive a new licence from the HCRA. As part of our licence process, the HCRA conducts a thorough review of everyone associated with the builder’s application such as financial backers, those acting as a principal, director, or officer of the company, and other people who may have influence or control over the business.

Understanding who may be involved in an applicant’s homebuilding business is a fundamental aspect of the HCRA’s licensing process to protect consumers and limit the resurgence of bad actors in the industry. And the process works! For example, the HCRA recently refused to grant a licence after discovering the applicant had ties to a former licensee who had their licence revoked due to numerous conduct issues.

Questions?

If you have questions about the HCRA’s licensing process, we would love to hear from you! It’s important the HCRA provides you with the answers you are looking for. Also, if you want to see other topics covered in The Home Front, let us know!