A code of ethics for builders and their staff which comes into effect on July 1 has the potential to create a sea change in the marketing of new homes and condominiums.
The first in Ontario history, the industry code takes effect through a government regulation under the New Homes Permits Act, 2017.
The Code is binding on all Licensed Builders, and their employees, directors, officers, agents and independent contractors.
Under the new regulations, builders are required, among other things:
- be fiscally responsible;
- not engage in any act or omission that may be disgraceful, disreputable, unprofessional, improper or likely to bring discredit to the construction industry;
- not to make false declarations; and
- be clear and truthful in describing the features, benefits and prices associated with a new home and in explaining the products, services, programs and prices associated with these new homes.
To me, this marks a huge step forward in consumer protection and will go a long way to eliminating or reducing the effect of many disclaimers in builders’ sales contracts. It should also prevent sales representatives from making promises that are not in the purchase contract.
Perhaps the biggest impact of the new code of ethics will be its effect on the discrepancy between some builders’ marketing materials and sales contracts regarding the look, size and layout of new homes. , lot sizes and condominium units.
Sales brochures and typical marketing floor plans are often quite specific when it comes to the size of building lots, homes, and condo units, as well as unit views and layouts. But many builders don’t include floor plans or square footage in their agreements; if they do, there are often disclaimers stating that all details are subject to change.
When it comes to features and finishes, a disclaimer allowing for a host of changes to promised amenities appears in nearly every Toronto-area building contract. If the code requirement to be clear and truthful about features and finishes is to have any meaning, these disclaimers should soon be eliminated.
It remains to be seen whether the code will have any effect on builders who cancel projects and then resurrect them and sell for higher prices.
The code has also set up disciplinary and appeals committees to strengthen its application. Anyone with a complaint may file it with the Registrar appointed under the New Homes Permits Act. After investigation, the Registrar may attempt to mediate or resolve the complaint, issue a written warning to the builder, or require the builder to take additional training courses. The Registrar may also dismiss the complaint or refer it to a Discipline Committee.
The committee then holds a hearing and renders a decision. If the committee determines that there has been a violation of the code, it may require the licensee to take or pay for additional training courses for its employees and may impose a fine of up to $25,000.
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