More On Tarion

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Back to Roseman: Heating and cooling systems can fail in new homes **Roseman: Heating and cooling systems can fail in new homes **

November 18, 2011
Ellen Roseman

I’m getting complaints about heating and air conditioning systems installed in brand-new homes. Buyers say it’s hard to get repairs done under warranty when the equipment doesn’t work properly.
Bonnie and Don Pollock have a Keeprite air conditioning system, which they feel was faulty from the time they bought their home in St. Catharines, Ont.
When they first turned on the cooling in spring 2007, they got nothing but hot air.
“We placed a call to the builder, who in turn called the heating contractor who originally installed the system, Heritage Heating (Niagara),” Don said.
In 2010, the builder sent Heritage Heating to fix the cooling system again. The same problem recurred in June of this year.
The builder said their home warranty had expired. And the contractor said the compressor could be fixed only if they paid the labour cost ($339).
“My wife and I were upset. We’d built a new home and had problems with our air conditioning system three times in a period of just over three years,” Don said. “And in that period, the system was not used very much.”
Mike Dufour, a spokesman for International Comfort Products (ICP), which makes Keeprite, agreed to cover the labour cost when I contacted him.
Keeprite didn’t inspect the compressor when it first broke down in 2007, Dufour said.
If the manufacturer had done so, it wouldn’t have denied full compensation when the part failed again this year.
Homebuilders tend to install low-cost heating and air conditioning systems, leading to premature breakdowns. Some homebuilders don’t even buy them, but rent them from an outside supplier.
Bev Craddock has a five-year-old Toronto home. She was forced to sign a 10-year rental contract with morEnergy Services Inc. for heating and cooling equipment in order to close the deal.
She’s had problems ever since. But she’s tried without success to get the builder and Tarion Warranty Corp. to address her complaints, such as a huge temperature difference between the basement and the top floor bedroom.
Finally, she went to the License Appeal Tribunal to challenge Tarion’s decision that the rented equipment fell outside her home warranty.
The tribunal agreed with her, saying that rented equipment was not excluded from home warranty coverage. It awarded her $40,000 to fix the problems.
“I won, but there’s no end in sight,” she says. “Why won’t Tarion help me?”
When Craddock asked why she hadn’t received the promised compensation, Tarion president Howard Bogach said he was waiting for the end of the appeal period (Nov. 21) before processing her award payment.
“The matter of the rental of essential items within a home is relatively new,” Bogach wrote. “We are further examining the implications and are not in a position to completely waive our right of appeal.”
Craddock feels the issue is about protecting homebuilders and Tarion from other such claims.
She hired an expert, Dara Bowser of Bowser Technical Inc., who specializes in inspecting faults in residential heating, ventilation and air conditioning (HVAC) systems.
“Tarion has been aware of the problem since 2009,” he said, referring to substandard systems installed in thousands of new Ontario homes.
Bowser contacted the Ontario consumer ministry, which is responsible for the legislation that governs Tarion, in August 2010. He didn’t get a response.
I’d like to hear from owners of newly built homes. Did you have heating or cooling system problems that weren’t addressed by the builder and Tarion? I’ll follow up in a future column.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at

Aaron: Revised purchase agreement could ease ‘sticker shock’
Published On Fri Nov 25 2011
By Bob Aaron Real Estate Columnist

In a landmark consumer protection initiative, the Tarion Warranty Corp. has proposed a requirement that builder purchase agreements set out in one place all the extras that can be added to the price of a new home. (Tarion regulates the home-building industry in Ontario and administers the warranty program for new homes.)
If enacted, this initiative would mark a significant departure from the current practice whereby extras (euphemistically called “adjustments” by developers’ lawyers) are scattered through purchase agreements. It often requires the skills of a legal Sherlock Holmes to ferret them all out and calculate the total cost implications.
The proposed changes arose out of concerns expressed to Tarion about inadequate disclosure of the myriad of different items that are often charged on closing, resulting in “sticker shock” to buyers — and worse, an inability to raise the necessary funds.
When the regulations become law, a new Schedule B will be attached to the Tarion addendum in each builder purchase agreement. The schedule will be divided into two parts.
The first part will contain a list of fixed additional payments, fees and adjustments to the purchase price which the purchaser will be required to pay on closing.
The second part will list all variable adjustments to the purchase price. Builders will not be able to collect any extra charge if it is not shown on Schedule B.
In the category of fixed additional payments, the following types of charges will be listed for purchasers, no matter where else they are shown in the agreement:
• The Tarion Warranty Corp. enrolment fee (based on the price of the unit).
• A $300 fee plus HST for record-keeping to hold the purchaser’s deposits in trust.
A $50 fee for cashing and recording each deposit cheque.
A $150 fee plus HST to discharge the builder’s construction financing and give clear title after closing.
The builder’s lawyer’s $73.45 real estate transaction levy, payable to the Law Society.
A fixed fee for any NSF cheque.
A fixed fee to make changes to a purchase agreement, such as adding another purchaser.
• Fixed legal and administrative fees if the builder allows the purchaser to “flip” the purchase agreement.
Under variable adjustments, purchasers will be alerted in one place to all the extra charges which cannot be determined at the time the agreement is signed. The variable charges may include:
The condo unit’s share of the cost of installation of gas, hydro, sewers and water services and meters, to an unlimited amount.
Any new taxes imposed on the home or condo unit after the agreement was signed, also an unlimited amount.
An unlimited levy for parks, public art or other municipal charges.
HST on the cost of any included appliances.
Interest on the balance of the purchase price from the day of final closing to the next banking day.
Any increase in municipal, education or transit development charges imposed after the agreement is signed.
An unlimited contribution to the builder’s share of all costs associated with a municipal development agreement.
Any new taxes imposed on the unit by any level of government after the agreement was signed
An unlimited levy for parks, community services, boulevard tree planting, public art levy or other municipal charges
Interest on the balance of the purchase price from the day of final closing to the next banking day
Estimated municipal taxes for the year of closing and the subsequent year.
With the entire list of variable charges in one place, purchasers will be alerted to them in a way that current builder agreements do not make clear. Purchasers will then be free to either accept the risk of unlimited extra charges or attempt to negotiate a maximum amount with the builder.
As a past board member and current chair of Tarion’s consumer advisory council, I am an enthusiastic supporter of the proposed changes. As I see it, they will make builder offers more transparent and easier to understand. As well, they will go a long way towards reducing “sticker shock” for new home buyers.
Bob Aaron is a Toronto real estate lawyer and consumer advocate. He can be reached at Visit his website at](“”)

New home warranty plan draws reader ire

By Ellen Roseman | Mon Dec 5 2011

Barbara Captijn bought a house from a builder in 2007, assuming she could rely on the Ontario new home warranty to save her from major repair costs in the first few years.
Now she’s going to small claims court to sue the builder over problems with the hot water heating system installed in her multi-million dollar downtown Toronto home.
Things started going wrong within 10 months of the purchase. But Captijn listened to her builder’s advice not to go to Tarion Warranty Corp., which administers the program.
“The builder gave us the runaround for over two years, making us think we had routine plumbing problems and not a serious defect in the hot water installation design and use of equipment,” she says.
Only when she hired an independent expert did she find the hot water tank was carrying too much heat load for its capacity. But her two-year warranty on mechanical systems had expired.
Captijn kept fighting. She tried and failed to get coverage under Tarion’s seven-year warranty for major structural defects.
When she appealed to the provincial License Appeal Tribunal, she was offered $8,000 to settle the case just before the hearing.
“The offer was too low to cover our repair costs and was contingent on giving up our rights to proceed against the builder in small claims court,” she says.
“We should have just ignored Tarion and gone directly to small claims court. That’s the advice I’d give other consumers.”
Buyers pay for the new home warranty, with enrolment fees ranging from $600 to $1,900, depending on the sale price. Builders bundle it into the listing price or add it to the statement of adjustments paid during closing.
Howard Bogach, president of Tarion since 2008, says Captijn shouldn’t have waited until the fourth year to file her claim.
“Any coverage has limits,” he said. “We have pretty specific rules and this was not a major structural defect. I can’t say any more than that. I thought it was crystal clear.”
Captijn is not alone in blaming homebuilders for taking short cuts when installing heating, ventilation and air conditioning systems.
On Nov. 19, I wrote about Bev Craddock. She was awarded $40,000 by the License Appeal Tribunal when Tarion refused to fix her heating system.
Tarion decided not to appeal, but the builder plans to appeal. Now she has to hire a lawyer to argue that she wasn’t served with the papers properly.
“It’s a big lie that Tarion or the tribunal provides a simple means of resolving disputes. It’s just one big exercise in wearing you down,” Craddock says.
When I asked readers about inadequate home heating systems, I heard from a number of people. Many blamed Tarion for refusing to help.
“Tarion is much more interested in protecting the builder than the consumer,” said Carol and Dale Egan, whose custom-built home came with a high-efficiency furnace that burned through four motors in four years.
After the two-year Tarion warranty expired, they were told they could get another free motor but they had to pay for the service call and labour cost.
Another reader talked about having two furnaces replaced within two years and not getting access to test results shared with the builder. Both furnaces and the ducts were undersized.
“I’ve learned how ‘in bed’ Tarion is with the builders in this whole process,” said the reader, who wanted to remain anonymous.
Tarion has replaced heating systems several times for homeowners in some new developments. The engineers who installed the systems have been called to disciplinary hearings by their professional associations.
Even Mike Holmes, the outspoken contractor, has done a segment on his HGTV show featuring an owner with a heating system that didn’t do the job. Called Re-Inventing, it will run again on Dec. 26.
“We don’t think there’s a systemic problem,” Bogach insists. “We have very few complaints about heating systems.”
If you have comments about new home defects and the Tarion warranty, please let me know. Let’s keep the discussion going.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at