Zoocasa
Real Estate Sold Prices
Calculator
Map
Property Trends & Insights
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
  • Real Estate News
Zoocasa
Home Buying a Home

How do RECO and Tarion Protect Homebuyers?

Daibhead O’Ceallacháin by Daibhead O’Ceallacháin
November 8, 2016
in Buying a Home
3 min read
How do RECO and Tarion protect homebuyers?
Share3
Tweet
Share2
5 Shares

One need only look to the ever-evolving skyline in Canada’s largest city to see that Toronto real estate is thriving. In October, the federal government sought to apply the brakes to the country’s hottest markets with new lending rules, but this has had little effect in Toronto so far. That same month, the average price of homes across the region rose 21% year-over-year to $762,975, according to data from the Toronto Real Estate Board.

Protection for Ontario Homebuyers

With so many buyers entering the market, what protections are in place for people making the leap into homeownership? When you are talking about a purchase that could be approaching the $1-million mark or more, buyers need be sure that their interests are being looked after.

In Ontario that means either Tarion or the Real Estate Council of Ontario (RECO), which provide safeguards for different stages in the home-buying process.

What Does Tarion Do?

Tarion is the province’s home building watchdog and warranty backstop that has been in operation for over 40 years. The organization administers the Ontario New Home Warranties Plan Act, which aims to protect consumers when builders fail to fulfill their warranty obligations.

Almost every new home in the province is covered by a new-home warranty that lasts up to seven years and is backstopped by Tarion.

This means that over 365,000 homes are currently enrolled in the warranty program with an additional 50,000 joining each year.

It is also Tarion’s remit to grant licences for builders operating in Ontario. Those that receive a licence must prove they have the technical, customer-service and financial capabilities to successfully build homes. Those that elect to work without a license can therefore be liable for prosecution.

What is RECO?

The Real Estate Council of Ontario, or RECO as it is more commonly known, provides protection to consumers who work with a real-estate broker or salesperson in buying or selling a home.

Established in 1997, RECO operates under the Real Estate and Business Brokers Act (REBBA) 2002 and thus oversees the conduct of real-estate brokers, brokerages and salespersons.

After receiving a complaint, RECO will investigate to see if any wrongdoing has occurred and can then prosecute registrants for professional misconduct ­- the organization also has the ability to suspend or revoke a broker or salesperson’s ability to trade in real estate.

Another feature of RECO is that it provides consumers with insurance where their deposit is held in trust. The deposit is insured against loss, insolvency or misappropriation if it is paid to a brokerage registered under REBBA 2002.

Room for Improvement in Consumer Protection

Aside from their role as industry watchdogs, both Tarion and RECO have it in their mandate to educate consumers, as well as promoting best practices among home builders and those in the business of selling them.

In protecting consumers, there are limitations with both these bodies, however, which has led to calls for reform among industry observers.

Last week, Tim Hudak, CEO of the Ontario Real Estate Association, called for RECO to have greater powers to investigate and punish wrongdoing in the industry. This came on the heels of a CBC Marketplace investigation that identified a number of real estate agents breaking REBBA rules in an effort to increase their commissions.

Hudak, the former leader of the Progressive Conservative Party in Ontario, believes RECO needs to proactively investigate bad behaviour before receiving a complaint, and should be able to dish out fines much higher than the current maximum of $25,000. This limit, he says, did not reflect the new reality of real estate in the province where agents can make around $40,000 for a double commission on an average home sale in Toronto.

The huge increase in property prices has meant Tarion too has been criticized for not moving with the times.

The organization’s limit for deposit protection — $20,000 for condos and $40,000 on homes — is far too low naysayers say, especially in markets like Toronto.

Urbancorp an Example of Exposed Buyers

The need for industry bodies like RECO and Tarion was brought into sharp focus recently with the much-publicized Urbancorp debacle.  Following the developer’s bankruptcy, buyers were forced to go through the court system to complete the purchase of their homes – a fight they ultimately lost as an Ontario Superior Court judge approved the sale of the properties to developers that would not honour the original purchase agreements.

The buyers are now in the process of trying to win back their original deposits during Ultracorp’s insolvency proceedings, and will be able to file a claim with Tarion for any shortfall up to $40,000.

Previous Post

How Badly do Americans Want to Move to Canada… Really?

Next Post

What Buyers and Sellers Should Know About Multiple Representation in Real Estate

Daibhead O’Ceallacháin

Daibhead O’Ceallacháin

Daibhead O’Ceallacháin is a freelance writer from Ireland that moved to Toronto in 2010. Writing for his local newspaper, he covered real estate during Ireland’s “Celtic Tiger” era and the subsequent housing crash and financial crisis. Today he writes about real estate, finance and politics in Canada, the U.S., Ireland and England.

Related Posts

Affordability

Rent or Buy? Average Monthly Rental Prices vs. Monthly Mortgage Payments in the GTA

August 10, 2022
Ask the Pros

Should You Purchase a Home With an Open Floor Plan?

August 8, 2022
Buying a Home

Condo Apartments Remain the Most Affordable and Second Most In-Demand Property Type in Toronto and GTA: TRREB

August 4, 2022

Blog Search

No Result
View All Result

Recent Articles

Sharp Housing Adjustment as Sales Continue to Drop: CREA

August 15, 2022

Hidden Gems for Sale in Markham under $700,000

August 12, 2022

Rent or Buy? Average Monthly Rental Prices vs. Monthly Mortgage Payments in the GTA

August 10, 2022

Should You Purchase a Home With an Open Floor Plan?

August 8, 2022

Sharp Housing Adjustment as Sales Continue to Drop: CREA

August 15, 2022

Hidden Gems for Sale in Markham under $700,000

August 12, 2022

Rent or Buy? Average Monthly Rental Prices vs. Monthly Mortgage Payments in the GTA

August 10, 2022

Should You Purchase a Home With an Open Floor Plan?

August 8, 2022

Condo Apartments Remain the Most Affordable and Second Most In-Demand Property Type in Toronto and GTA: TRREB

August 4, 2022

Your Home’s Screen Appeal: How to Stage Your Home for Photos and Videos

August 3, 2022

Newsletter Sign-up

Join a community of 130,000+ subscribers. Don't miss important real estate news, market data, and buying and selling tips.

Social Media

Featured Listings (Updated Weekly)

Hidden Gems for Sale in Markham under $700,000

August 12, 2022

The Most Expensive and Affordable Homes Sold in July in the GTA

July 29, 2022

The Most Viewed Homes in June 2022

July 22, 2022

Condos for Sale with Amenities in the GTA

July 11, 2022
first-time home buyer programs and rebates

About Zoocasa

Zoocasa.com is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions.

Newsletter Sign-up

Join 130,000+ weekly subscribers. Don’t miss important real estate news, market data, and buying and selling tips: sign-up here.

Social Media

Zoocasa Tools

MLS Listings Canada
Search Sold Listings
iOS App
Android App
Find an Agent
Contact Us

  • Homes & Real Estate Properties
  • Terms of Use
  • Privacy Policy
  • Contact Us

© 2015 - 2022 Zoocasa Realty Inc., Brokerage

  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
  • Real Estate News
No Result
View All Result

© 2015 - 2022 Zoocasa Realty Inc., Brokerage