Ontario to boost penalties on developers who breach ethics rules

The Doug Ford government is poised to crack down on developers who unjustifiably cancel or jack up the price of pre-construction sales agreements, CBC News had learned. 

Premier Doug Ford promised action in the wake of CBC story last fall

Pace Developments cancelled preconstruction agreements with 70 buyers at its Urban North condo development in Barrie last fall and upped the price by $100,000 per unit. (Tina Mackenzie/CBC)

The Doug Ford government is poised to crack down on developers who unjustifiably cancel or jack up the price of pre-construction sales agreements, CBC News had learned.

The province has revealed its plans to boost the fines on house and condominium developers who breach Ontario's rules for the sector, and open the door to suspending the licences of offenders for up to two years.  

The move comes in the wake of reporting by CBC News about an Ontario developer that cancelled dozens of sales contracts for condo units that were already under construction, unless the buyers agreed to pay more. 

The company defended its actions as legal, saying the costs of building materials had risen. But Ford reacted to that case last November by calling it unacceptable and unfair.

"Nothing burns me up more than that — some developer just trying to make extra money off the backs of hard-working people," Ford said at the time, pledging to put an end to the practice.

The proposed changes were revealed Thursday but the government gave CBC News information in advance of the launch. The province is launching consultations immediately, with a July 1 target date for putting the new rules in force. 

The proposed changes would double the maximum fines on house and condominium developers who breach Ontario's code of ethics for the sector, and would allow for suspending offenders' operating licences for up to two years. (Cole Burston/Canadian Press)

The moves would give more teeth to Ontario's recently created Home Construction Regulatory Authority, which licenses builders and developers and administers the code of ethics for the sector.

"I think this is going to do a very good service to those condo buyers to ensure that we're protecting their rights," said Government and Consumer Services Minister Ross Romano.

"Our goal is to ensure that before a builder or a developer ever puts a homeowner through this process of cancelling their condo project, that they're going to think twice about it," Romano said in an interview. 

The proposed changes would require developers to disclose to the regulator all instances when sales contracts are cancelled without fault of the buyer and lay out the reasons for the cancellations. The information would be made available to the public.  

Companies that try to squeeze more money out of buyers who've already signed presale contracts could have their operating licence suspended for up to two years. 

The proposed new penalties against developers who break Ontario's rules were unveiled by Government and Consumer Services Minister Ross Romano, left. Premier Doug Ford promised last fall to stop companies from breaking signed pre-construction sales agreements with home buyers. (Benjamin Aubé/CBC)

Romano said the threat of such a licence suspension is the most significant change as it would carry "very, very serious financial ramifications" for any developer. 

Currently, the maximum fines that can be imposed on developers by the disciplinary committee of the Home Construction Regulatory Authority (HCRA) are $25,000 for individuals and $50,000 for corporations.

The government is moving to double those maximums and, in the case of repeat offenders, to allow for fines that exceed the maximums.

He says changes would also ensure that deposits are returned at the Bank of Canada interest rate so consumers don't lose money if a condo project is cancelled.

"This creates protection for a home-buyer," said Romano. "It's protecting the little guy from those bad actors."

Other proposed changes coming Thursday include empowering the HCRA to launch its own investigation into shady practices by developers. Until now, the agency could only investigate in response to formal complaints. 

The HCRA was launched in February 2021, with the responsibility of licensing and overseeing some 6,000 developers and builders in Ontario. The agency says it responded to more than 600 complaints in its first year of operating,  

The government is also seeking feedback on what it calls "potential future regulatory proposals" that could force developers to disclose information about price adjustments to a purchase agreement and stop developers from selling a new home for a period after terminating a presale contract.

The Opposition New Democrats said the stricter penalties won't be effective if they aren't enforced.

Deputy party leader Sara Singh noted that the regulatory authority already had the power to issue fines.

"The tools are important, but actually acting and enforcing those mechanisms (is) also really important," she said.

With files from The Canadian Press