Ontario to Toughen Penalties for Developers Who Violate Ethics Rules

Doug Ford’s government is set to crack down on developers who unjustifiably cancel or raise the price of pre-construction sales deals, CBC News has learned.

The province will unveil proposals on Thursday to increase fines for home and condominium developers who break Ontario’s rules for the sector, and open the door to suspending offenders’ licenses for up to two years.

The move follows a CBC News report about an Ontario developer who canceled dozens of contracts to sell condominium units already under construction unless buyers agree to pay more.

The company defended its actions as legal, saying construction material costs had risen. But Ford reacted to the case last November calling it unacceptable and unfair.

“Nothing burns me more than this – a developer is just trying to make extra money off the backs of hard-working people,” Ford said at the time, pledging to end the practice.

The proposed changes are due to be revealed on Thursday, but the government gave information to CBC News ahead of the launch. The province is immediately launching consultations, with a target date of July 1 for the new rules to come into effect.

The proposed amendments would double the maximum fines for home and condominium developers who violate Ontario’s code of ethics for the sector and would allow violators’ business licenses to be suspended for up to two years. (Sam Nar / Radio Canada)

These measures would give more teeth to the recently created Ontario Residential Building Regulatory Authoritywhich 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 these condo buyers to ensure that we protect their rights,” Government and Consumer Services Minister Ross Romano said.

“Our goal is to make sure that before any builder or developer puts a landlord through this process of canceling their condo project, they think twice about it,” Romano said in an interview.

The proposed changes would require developers to disclose to the regulator all instances where sales contracts are canceled through no fault of the buyer and state the reasons for the cancellations. The information would be made available to the public.

Companies that try to extract more money from buyers who have already signed pre-sale contracts could have their operating license suspended for up to two years.

Proposed new penalties against developers who break Ontario’s rules will be unveiled by Government and Consumer Services Minister Ross Romano, left. Premier Doug Ford promised last fall to prevent companies from breaking pre-construction sales agreements with homebuyers. (Benjamin Aubé/CBC)

Romano said the threat of such a license suspension is the most significant change because it would have “very, very serious financial ramifications” for any developer.

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

The government is preparing to double these maximums and, in the case of repeat offenders, to authorize fines that exceed the maximums.

“It creates protection for a homebuyer,” Romano said. “It protects the little guy from these bad actors.”

Other proposed changes coming Thursday include empowering UNHCR to launch its own investigation into shady developer practices. Until now, the agency could only investigate in response to official complaints.

The HCRA was launched in February 2021, with responsibility for 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 operation,

The government is also seeking comment on what it calls “potential future regulatory proposals” that could require developers to disclose information about price adjustments to a purchase agreement and prevent developers from selling a new house for a certain period of time after the termination of a presale contract.