Ethics isn’t just for philosophy students; for Ontario home builders, it is now the law. On July 1, 2021, Ontario Regulation 245/21 introduced a legislated code of ethics for licensed builders. The result is a lengthy list of both positive and negative obligations that builders must follow, with potentially serious financial consequences if they do not.
The team at SV Law has outlined the new responsibilities and consequences of failure below.
The Code of Ethics
The new regulation introduces both positive and negative obligations — things that builders shall do and things builders shall not do. Broadly speaking, these obligations can be broken down into three categories: Legal, advertising, and service.
The legal category has straightforward obligations. It states that the builder, including its officers, employees, and the like, must comply with the Act, the regulations, and the laws of every jurisdiction where it conducts business. The builder also has an obligation to use the prescribed forms or documents required by law, and keep all reasonably required business records, whether prescribed by law or not.
As for the negative obligations, the regulations prohibit builders from participating in the illegal construction or sale of new homes, disclosing confidential information without consent, providing false or misleading information to the regulatory authority, or obstructing anyone from making a complaint against them. These new obligations likely do not change existing business practices much, if at all.
In the advertising category, builders are obliged to be clear and truthful in describing the features and benefits of the new home, and any products, services, or programs offered with it. There is a positive duty to ensure that all representations, specifically advertising, are not false, misleading, deceptive, or illegal.
Similarly, a builder cannot falsely claim, directly or indirectly, that a portion of the price is fixed or otherwise determined by a government authority. Depending on the quality of a builder’s current documents, this may be a large change.
The largest section of obligations comes in the service category. This area focuses on how the builder directly interacts with customers. There are a host of positive obligations, namely:
- Builders must treat people fairly, with honesty and integrity, including providing reasonable accommodations to those with disabilities.
- Builders must provide conscientious, courteous, and responsive service while demonstrating reasonable knowledge, skill, judgment, and competence.
- When carrying on their business, builders must ensure that the health and safety of the public is protected.
Most of these positive service obligations have a corresponding negative one as well:
- Builders shall not discriminate, harass, or bully, nor shall they intimidate, coerce, or place undue pressure on people.
- Builders shall not engage in misrepresentation.
- Section 8 of the regulations is a wide catch-all provision for negative behaviour, forbidding conduct that is “disgraceful, dishonourable, unprofessional, unbecoming of a licensee or likely to bring the sector into disrepute”.
What Does This Mean?
Taken as a whole, few of these requirements are surprising. Many simply codify standard business practices: Acting with integrity, keeping business records, providing courteous services, and avoiding discrimination. These are all things that competent builders already do. The legislature is taking aim at the bad apples in the building sector, and as a result, all builders must check that they are meeting these requirements.
The sole exception would be in the advertising category. Having the Agreement of Purchase and Sale outline one thing but the promotional materials state another may be in violation of the new code. Sales personnel who make promises that are not in the disclosure materials, even if in good faith, may be another potential breach. It is essential that legal documents, advertising materials, and salespeople are all on the same page.
Violating this ethical code may bring a range of penalties, depending on the magnitude of the breach. A minor penalty could result in builders needing to take educational courses. A more significant penalty could result in a discipline committee imposing a maximum fine of $25,000 and requiring the builder to pay the costs of the proceeding.
Most builders likely do not need to radically change their operations as a result of this new code of ethics. However, given the potential financial penalty, a prudent builder should review its internal operations and, in particular, its sales and advertising documents, so as not to be caught unaware.
If you have any questions or concerns about these recent changes, contact our team of lawyers.
The content of this article is intended to provide a general guide to the subject matter and is not legal advice. Specialist advice should be sought regarding your specific circumstance.