Think you’re safe from problems when you buy a new home? Think again
Dave Prosser and Sylvia Potter bought their brand new home just three years ago, for a few hundred thousand. It was supposed to be their dream home, but instead they’re living a new home nightmare.
In their first year of ownership, Dave and Sylvia compiled a list of 106 complaints to submit to their new home warranty provider, Tarion.
“This was going to be our last home,” Dave tells Marketplace’s Wendy Mesley. “You buy a new home, you think it’s not going to break right away.”
Down the street, the same story. A new house built by the same builder and lots of problems.
Joanne and Joe West spent their lifesavings on their new home, but two weeks after they moved in part of their basement floor actually caved in. They compiled a long list of problems too, and the builder did eventually fix a few flaws -- but others, not at all.
Joe has worked in construction for over 20 years, so he began to fix things himself. But it means he has to spend tens of thousands of dollars of his own time and costs for materials and equipment needed to complete the work.
Marketplace calls in TV contractor Mike Holmes to drop by and check out Joanne and Joe’s problem home firsthand.
He finds a problem in Joe’s garage – there’s no sheathing along that wall. Mike says the house should be condemned, meaning “they’ll put a condemned sign on the front door, you get to live in a hotel and until this house is fixed, you are to stay the hell out of it. “
The City of Hamilton is supposed to watch over builders by issuing building permits and checking plans. Every house should have a permit for Joe and Joanne's house before the shovel hits the ground. We do some digging of our own and find out the City of Hamilton didn’t issue a permit until five months after construction began. And at Dave and Sylvia’s? No permit till the day they took possession. In fact, a whopping 18 houses on their street were started without permits, all built by a Hamilton builder, Brett Wright.
In an interview with Wendy Mesley, the City of Hamilton’s Chief Building Inspector, John Spolnik says it’s supposed to issue permits and then follow up with all the inspections:
Spolnik: It’s up to us to enforce that requirement. We need to make them get a permit.
Mesley: So it would be illegal, then?
Spolnik: It would be contrary to the Ontario Building Code to construct without a permit.
Mesley: 18 of [the homes], the permit wasn't issued until after construction began? Until after inspections were done? If there's no permit, how can they follow standards?
Spolnik: They’re looking for as much as they can that is obviously not in accordance with the Code.
Mesley: You're almost facilitating the process by saying, looks pretty good. Next. Keep building.
Spolnik: No, we’re not facilitating it.
Mesley: But that's what it seems like, if it's not a real inspection.
Spolnik: It’s an inspection better than zero… as advised by our legal department, we are better off to find as many things as we can through that process.
Three years in, both couples are now suing the City of Hamilton and their builder, and both couples are tens of thousands out of pocket for private inspections, repairs, and legal fees. And that’s just the beginning, their case could take years to resolve.
So how does this happen?
“When the system fails the people, that’s how it happens,” says Holmes. “It’s not properly inspected and if it was these guys should be smacked silly. If it was government inspectors that actually inspected this, they should be fired. Never mind the builder should be put in jail. He’s built a house that has devastated so far two people on this street, financially devastated, emotionally devastated, and where is he right now? Let me guess he’s building another house.”
We dig around and discover he is. Brett Wright is building a half-million dollar home just outside Hamilton.
Every province has a new home warranty program – in some it’s mandatory to join and can cost almost $800. In Ontario, the program is called Tarion.
When the homeowners started having problems, they turned to Tarion. It initially offered Dave and Sylvia a few thousand dollars to fix a couple of problems, but other issues were denied altogether.
“They would you know, say not warranted, not warranted, not warranted, by item," says Sylvia. "And we'd say, well wait a minute!"
Desperate to prove their case, Sylvia and Dave spent $7,000 hiring their own private engineer. That’s on top of thousands spent in legal fees and costs to have things fixed.
Tarion had over $300 million in its war chest, so why so stingy? Wendy interviews Tarion President Howard Bogach.
Mesley: They feel or felt that Tarion was there to protect them, and in the end, they ended up feeling you were there to protect the builder.
Bogach: I can assure you, I have home owners that are upset with me. I have builders that are upset with decisions that we make along the way. Ours is to try and be completely impartial and try and call them as you see them along the way.
To find out more about Tarion, we talk to Real Estate Lawyer, Bob Aaron:
Mesley: In the past, people have complained about Tarion's Board of Directors... so who were they there to protect?
Aaron: The assumption is that they were there to protect builders who actually controlled the program… the board is stacked with builders.
But that might be changing. Aaron’s just been appointed by the Ontario government to join Tarion’s board.
But why is the builder Brett Wright still building?
Tarion licenses builders in Ontario, but there’s no indication in their builder’s database that they’re trying to revoke his licence. And what about that brand new house? Tarion told Wright a year ago to stop building. Instead of using his company name, he stayed under the radar by building under his own name – as the owner. Seems he knows how to work the system.
Mesley: They had to hire their own inspectors, their own engineers, their own lawyers – it took them years. They had to fight you at every turn.
Bogach: I absolutely agree with you on that point. I can only apologize. I think there were things that happened on those files that created issues and confusion along the way. I hope we would never treat somebody like that in the future. Issues happen, mistakes happen, that’s the nature when you deal with 450,000 homes. Some things will fall through the cracks, and our objective is to try and make sure we pick up on those things and they don’t become significant.
Try telling that to Joe and Joanne and Dave & Sylvia. After lowballing them offers, Tarion finally comes through with much larger settlements. Dave and Sylvia receive $85,000. Joe and Joanne can't discuss their settlement amount with us. But it’s still not near enough to fix the problems with their new homes.
For Mike Holmes, the big problem is still the builder Brett Wright.
“He got away with the whole system,” Mike says. “He’s not back here, he’s not fixing this, the government’s not fixing this, the new home warranty’s not fixing this, and you’re left holding the bag so – as far as I’m concerned, you have been so screwed.”
We spend weeks trying to talk to Wright. He doesn’t agree to an interview, so we track him down.
Mesley: Mr. Wright? We're with CBC Marketplace. We've talked to people who've had to spend tens of thousands to fix the homes you've built. You have nothing to say to them?
Wright: I’ve got nothing to say to you or them.
Mesley: Why do you keep building homes that have all these problems?
Wright: That’s a matter of opinion not mine.
Mesley: Well, Tarion has agreed. They've settled with them for a lot of money. And you're still building. What is your opinion about the situation?
Wright: I haven’t got one.
Meanwhile, the Hamilton families’ dream homes are still living nightmares.