On Monday, the Ontario government announced the Homeowner Protection Act 2024, which contains new measures to enhance consumer protections for homeowners and buyers, aiming to prevent harmful business practices and support informed decision-making.

The new measures include:

1. Banning consumer NOSI registrations. Businesses use Notices of Security Interest (NOSI) registrations to claim interest on rented or leased equipment installed on properties, and their misuse has been rising, leading to pressures on consumers to pay high buyout costs when selling homes or securing financing.

2. 10-day cooling-off period. A proposed 10-day cooling-off period for new freehold home purchases will allow buyers to reconsider their commitments, aligning protections with those for condominium buyers.

3. Cancellation disclosures. Builders’ histories of cancelling purchase agreements for new freehold homes will be publicly disclosed, boosting buyer confidence.

4. Combating illegal building and selling. The province will consult on measures to protect consumers from illegal builders, who often bypass licensing and fail to enroll homes with Ontario’s new home warranty and protection program, Tarion, resulting in more defects, increased risks and higher payouts.

5. Condominium owner protections. The Condominium Authority Tribunal’s jurisdiction will be expanded, and consultations will focus on improving condominium operations, management and transparency with more protections for owners and buyers.

6. Heritage conservation. Amendments to the Ontario Heritage Act will give municipalities until January 2027 to evaluate properties on their heritage registers, easing administrative pressures and supporting heritage conservation.

7. Transit-oriented housing. To expedite mixed-use housing near transit, Ontario proposes exempting designated transit-oriented community lands from certain Planning Act provisions, ensuring building partner certainty and efficient use of transit investments.

NOSI ban and 10-day cooling off period: Where OREA and TRREB stand

The Ontario Real Estate Association (OREA) says the Act is “a significant step towards protecting homeowners from bad actors during the largest financial transaction most Ontarians will make in their lives, and towards building much-needed housing supply across the province.” Similarly, the Toronto Regional Real Estate Board (TRREB) applauds the government’s introduction of the Act.

OREA says it commends Minister McCarthy and the Ford Government for the legislation and their efforts to protect vulnerable homeowners from bad actors who unfairly exploit the use of NOSIs.

“Too many Ontarians, when selling their home, have been surprised by one or more NOSIs — fine print in contracts for water coolers, furnaces or security systems that include exorbitant buyout charges to be paid before the home can be sold. Banning NOSI registrations will help reduce additional and unnecessary fees being tacked onto the price tag of a home,” says Tim Hudak, CEO of OREA.

He goes on to say that OREA is pleased with the 10-day cooling-off period for purchasers of newly built freehold homes, a protection that is already in place for pre-construction condominium sales in Ontario. “Extending this protection to newly constructed homes will enhance consumer protection by allowing buyers a 10-day period to review and cancel an agreement without penalty, levelling the playing field between Ontario’s hardworking families and well-resourced corporate developers with a team of lawyers.”

TRREB aligns with this, stating the proposal to apply a 10-day cooling-off period to purchasers of new freehold homes, is essential for protecting consumers and fostering trust in the real estate market. “It allows buyers to take a step back and get professional advice on the review of contracts and other aspects of a new home purchase,” notes Jennifer Pearce, TRREB president.

The regional board also agrees with the decision not to apply the cooling-off period to resale homes. “The dynamics of resale transactions are significantly different from new builds, and imposing a cooling-off period could introduce unnecessary complications and delays. While there are merits to cooling-off periods for new freehold homes that could establish protections for consumers against any pressure tactics when purchasing a new build, both sellers and buyers are consumers in the resale market which is different.

Most resale home transactions are intertwined and could have a negative domino effect on other transactions in a supply-constrained market. The resale home market operates under different conditions, and applying the cooling-off period to these transactions is neither practical nor necessary,” Pearce explains.

Hudak echoes similar sentiments, noting that Ontario’s realtors commend the province for not extending this policy to resale homes, “Which OREA has long emphasized would negatively impact both buyers and sellers as it would undermine certainty in resale transactions, which are typically between private citizens and do not involve corporate developers, and could lead to speculation.”

‘Easier and faster to add ‘missing-middle’ homes and increase overall density in areas that can best support high population levels’

In addition, OREA notes that mandating public disclosure of a builder’s history of cancelled purchase agreements for newly built freehold homes is a welcome policy that will provide consumers with transparency and peace of mind.

Finally, OREA commends the Ministry for acting on one of the key recommendations outlined in its most recent policy report, Analysis of Ontario’s Efforts to Boost Housing Supply: modernizing zoning to support greater density along transit corridors. “By exempting specific transit-oriented community lands from immunity provisions in the Planning Act, it will be easier and faster for the province to add ‘missing-middle’ homes to Ontario’s housing stock and increase overall density in areas that can best support high population levels.”

Pearce sums up TRREB’s support for the measures in the new Act: “We are committed to working with the government, industry stakeholders and our members to implement these changes effectively. We believe these measures will enhance the integrity of the real estate market and provide greater peace of mind for all Ontario homeowners.”