What good builders know

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By Wendy Moir, CEO and Registrar, Home Construction Regulatory Authority

Like any business, home construction can be done well, or it can be done poorly. And like most businesses, the secret to longevity and success is keeping your customers happy. Good builders know this and understand what it means to operate competently and ethically. Many local homebuilders’ associations have adopted a code of ethics for their members in recognition of the importance of professional conduct. However, regulations are designed to protect consumers from not-so-good or outright bad actors in any industry or profession.

New home construction, like any regulation of professionals, is regulated under provincial law. As a builder of new homes, you may need to be licensed, and you may be required to register new homes in a warranty program, depending on which province you are operating in. Licensing and warranty are required in B.C., Alberta, Ontario and Quebec. In other provinces there is no licensing requirement but there are voluntary warranty programs for certain types of new homes.

Even between the provinces requiring builders to be licensed, there are differences in requirements and the expectation that licensed builders are familiar with local requirements, such as building codes.

Which province you are doing business in will also determine how your regulator deals with homeowner complaints. In most provinces, complaints are restricted primarily to claims regarding construction defects.

In Ontario, builders and sellers of new homes are licensed by the Home Construction Regulatory Authority (HCRA) if they meet competency requirements. The HCRA also  regulates licensee conduct and enforces professional standards through a Code of Ethics. A legislated Code of Ethics is a first-of-its-kind for homebuilders and a tool the HCRA can use to ensure builders and consumers alike are aware of the standards building professionals are expected to meet.

Upholding ethical conduct

The HCRA upholds and enforces these standards under the Code of Ethics. The Code of Ethics regulation has 20 principles outlining how licensees are expected to behave and what is considered ethical and acceptable conduct for the industry. The Code includes directives for licensees, such as acting with fairness, honesty and integrity; providing conscious and competent service; and avoiding unprofessional conduct including harassment, misrepresentation and providing false or deceptive information, to name a few.

To view the Code of Ethics principles, visit hcraontario.ca/coe.

Professional misconduct

As important as it is for homebuilders to understand their ethical obligations, it’s equally important to understand what is considered professional misconduct. The Code of Ethics identifies behaviours that are absolutely prohibited for licensees, such as cooperating with illegal builders and sellers and obstructing complaints.

The HCRA takes professional misconduct seriously and takes measures against those who violate the Code of Ethics or do business outside of regulatory rules, including illegal builders. Some of the HCRA’s decisions include mandating training and education courses, imposing conditions on a license, imposing administrative penalties, referral to the Discipline Committee, or in the most severe circumstances, revoking a license entirely.

These are just some of the enforcement measures the HCRA can take – visit our website for more details on regulatory compliance and enforcement.

Navigating ethical responsibilities

The HCRA understands that most licensees comply with and meet their regulatory responsibilities. To help all licensees meet their obligations, the HCRA provides educational material and resources to help licensees navigate their ethical obligations, including regularly publishing advisories. The HCRA always encourages licensees to familiarize themselves with the advisories – they are the roadmaps for good professional conduct.

Advisories provide context and practical examples on several industry specific topics, including Code of Ethics principles, so licensees can better understand the real-world application of these ethical standards. Some of the HCRA’s advisories that highlight Code of Ethics principles include:

  • Advisory 2 – Honesty and Integrity: While licensees are in a position of power relative to homebuyers, the HCRA expects licensees to not exploit this relationship during the process of building and selling new homes. This includes maintaining honesty and integrity during the negotiation of Agreements of Purchase and Sale (APS) and any contractual matter that may arise after the licensee and a home buyer have signed an agreement.
  • Advisory 11 – Price Escalations and Contract Terminations: This advisory emphasizes the rules and conduct expectations for licensees around changes to signed agreements – notably price adjustments, additional charges and attempts at early termination of the APS. While licensees can make amendments to agreements, it must be done legally and conform to the Code of Ethics principles.
  • Advisory 12 – Intimidation, Coercion and Obstruction: This advisory is clear – there is no place for intimidation, coercion or obstruction in the homebuying process. Licensees are prohibited from using intimidating or coercive tactics and cannot prevent people from submitting a complaint to the HCRA. For example, it would be unethical for a builder to scare a purchaser into withdrawing a complaint made to the HCRA, or pressure them into signing an agreement before they have obtained legal advice.
  • Advisory 13 – Licensee Role in Stopping Illegal Building/Selling: The Code of Ethics explicitly prohibits licensees from facilitating or participating in the construction or sale of a new home by a builder or seller who is not licensed. This advisory is a reminder to licensees that working with unlicensed builders and sellers can result in consequences from the HCRA. Operating without a license, known as illegal building, is a serious issue – it can cause significant hardships for homebuyers, damage public confidence and trust in the industry and create an unfair and unbalanced marketplace. This advisory provides licensees with clear examples of what this prohibited behaviour may look like, including working with an unlicensed seller to sell a new home, selling a home on behalf of an unlicensed builder, or partnering with an unlicensed company in any way.

Supporting good builders

Upholding high professional standards and ethical conduct is good for everyone. The HCRA supports good builders and wants licensees to have readily available information and resources to work with customers and operate their businesses successfully, responsibly and ethically. The HCRA’s website offers excellent resources to help builders stay on this path.

Learn more at hcraontario.ca.