A home that has been put up for sale by an illegal home flipper

The Real Deal on Illegal Building for Realtors

Real estate agents play an important role in educating home buyers. When it comes to helping clients buy and sell new homes, the real estate agent is the one they turn to for advice. But what happens when the home your clients are contemplating is built illegally? It’s not just the builder and the buyer that it impacts – a real estate agent can be charged and fined for being involved in the sale of an illegally built home too.

It is illegal in Ontario to build and sell a new home without being a registered builder with Tarion. It is also illegal to build and sell a new home if you have not enrolled that home into the warranty program. In 2015, Tarion was involved in 241 illegal building investigations which resulted in 105 convictions, over $330,000 in fines and two jail sentences. We have had eight defendants sentenced to jail. The longest of which was 6 months served in full and was upheld by the appeals court.

It is illegal in Ontario to build and sell a new home without being a registered builder with Tarion. It is also illegal to build and sell a new home if you have not enrolled that home into the warranty program.

A gavel in a courtroom striking justice and slapping fines on illegal home flippers

If you are a real estate agent and involved in an illegal building sale, you can be charged as a party to the offence or for aiding and abetting an illegal builder.

Not too long ago, we were involved in a case where a real estate agent sold an older home to a purchaser looking to demolish the existing home and build a new one. The agent introduced the purchaser to her husband, an unregistered builder, who then contracted with the purchaser to build him a new home on that property. The agent also operated a numbered company that was involved in the construction of the new home. Charges were laid against the builder for failing to be registered and failing to enroll the home and the agent was also charged with acting as a party to the offence.

Real estate agents have a duty to know the law, and protect their clients from illegal building activities. An illegal building conviction can have also leave a nasty stain on their reputation, including a potential impact on their own registration with RECO.

It is not enough to say “I didn’t know that the vendor needed to be registered.” As the old adage goes, Ignorance of the law is no excuse. Real estate agents have a responsibility to know the law and abide by it – just like everyone else. Protect yourself, and your clients, from illegal building.

Lessons learned:

  • Real estate agents who sell a home built by an unregistered builder and that has not been enrolled with Tarion may be charged and convicted.
  • Just because you didn’t know it was an offence to build and/or sell a home without being registered with Tarion, does not mean you will avoid a conviction.

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