When Tarion declined Lesana Mohammed’s claim for warranty coverage for her unfinished new home, she fired off a terse email to the agency’s CEO.
A dispute with her builder left her with nearly $90,000 worth of unfinished work, and she was upset that Tarion, Ontario’s consumer protection organization for new builds, denied her claim for compensation.
Mohammed didn’t expect a response, so she was surprised when the agency responded in February with an olive branch — an invitation to its independent mediation program.
“I thought finally they were gonna turn this around and do the right thing,” Mohammed said. “I was hopeful.”
As she started to look up the names on the roster of mediators suggested by Tarion, that hope gave way to concern that the program wasn’t as independent as the agency claimed.
One of the mediators, whose role would be to resolve Mohammed’s dispute with Tarion on her warranty claim, was a former senior executive with the organization — a fact Tarion had not disclosed. At least one third of the nine mediators have ties to Tarion that a consumer rights advocate says should have been disclosed.
Mohammed questions how Tarion “can call it independent mediation.”
“If you have previous connections or affiliations with that organization, obviously there’s going to be some level of bias,” she said.
Mediation program under internal review
The mediation program was among the reforms Tarion put in place after a searing 2019 auditor general report found the agency was putting builders’ interest ahead of consumers. The program was meant to offer a less costly and less time-consuming impartial process for homeowners looking to challenge a Tarion decision.
But concerns over some mediators’ apparent ties to Tarion — and the agency’s failure to publicly disclose them — has reignited concerns over the uneven playing field between the province’s warranty provider and the homeowners.
Tarion CEO Peter Balasubramanian told the Star that the agency has started an internal review of the mediation program.
The agency has already updated its roster to include disclosure of any connections the mediators have with Tarion, a move sparked by public complaints. And the agency says it plans to make “improved disclosures” as of May 1.
‘Should have been disclosed’
Balasubramanian said it “should have been disclosed more clearly” that one of the mediators previously worked as a Tarion executive, and he understands how any perceived conflict of interest could undermine the public trust in the program.
“In hindsight, I wish we’d given it more thought at the beginning when we set up the program. I think there are some elements that we can improve on,” the CEO said.
Balasubramanian said he is also considering bigger changes to the program to make it better for the homeowners, including potentially replacing the roster of suggested mediators with a resource page to help homeowners select a mediator on their own.
“This is a good program and we’re committed to improving it,” he said.
While the improved transparency is welcome, consumer rights advocate Barbara Captijn said she remains concerned how Tarion still doesn’t fully understand the power imbalance facing consumers going up against the agency and homebuilders.
“It took until 2021 for the government and Tarion to introduce a new dispute resolution method (mediation), and now that appears to be a difficult road for consumers as well,” Captijn said.
In Ontario, builders are required to provide newly built homes with a warranty. A home warranty is a protection by the builder against certain defects, such as work, material, and structural defects for a period of time.
From a leak on the roof to a crack in the foundation, homeowners can first attempt to resolve these matters directly with their builders. When builders fail to fulfil their warranty obligations, homeowners can take their claims to Tarion, whose role is to ensure buyers receive the coverage they’re entitled to.
If Tarion denies a warranty claim or the homeowner disagrees with the agency’s assessment, independent mediation is supposed to offer an informal and collaborative meeting of the homeowner, a Tarion representative and the mediator. Mediation is just one option for homeowners, a Tarion spokesperson said: They could also pursue an appeal of an assessment before the Licence Appeal Tribunal or in provincial court.
Tarion covers the cost of the mediation up to $3,000 for a full day. A homeowner can propose a mediator who is not on its roster, but Tarion has to agree on the choice.
Mediators’ ties spark negative ‘perception’
On the current list of nine mediators are a former Tarion chief privacy officer, as well as four who serve or previously served on Tarion’s builder arbitration forum (BAF).
BAF is a forum where a builder can dispute Tarion’s warranty assessment if they believe homeowners’ warranty claims against them are not warranted or they shouldn’t be charged for a conciliation. The arbitrators at BAF are not employees of Tarion, but the agency administers the process, and pays the arbitrators depending on the outcome of the arbitration.
Up until 2016, Tarion appointed BAF arbitrators with the assistance of the Ontario Home Builders Association (OHBA), an industry group that the province’s auditor general has found was heavily involved in Tarion’s policy-making.
Two mediators on Tarion’s current roster were BAF arbitrators appointed before 2016, when Tarion still consulted the industry for the selection of the arbitrators.
“A red flag should go up in the CEO and his management’s mind to say this might be perceived as being not neutral in terms of a mediator. The mediator having past affiliations with a builder lobby group is not going to gain the confidence of consumers,” Captijn said.
Tarion spokesperson Andrew Donnachie said that the BAF arbitrators were not affiliated with OHBA or any lobby group.
“While we remain of the view that involvement in BAF is not a conflict, we accept that some homeowners could have such a perception,” Donnachie said.
When it comes to mediation, “trust is important,” said Jane Kidner, an adjunct professor at University of Toronto’s law school and a mediator who is not involved in Tarion’s cases.
While having a prior connection with Tarion shouldn’t automatically discount a mediator’s impartiality, she said “you can’t have a mediation if there isn’t a sense of trust with both parties. So, clearly something has to be addressed if parties, in particular, homeowners are concerned about this roster.”
Tarion says there were 166 mediations from 2021 to 2023. Many of them were done with mediators who were not on Tarion’s roster.
Tarion’s mediation stats still not public
While the outcomes are kept confidential, a Tarion survey of 24 homeowners revealed a majority of respondents gave positive reviews while a few raised concerns about fairness and effectiveness, Balasubramanian said
Tarion said on its website in 2022 that it would publicly post key statistics related to the mediation process that year, but no information has been made available so far.
Tarion spokesperson Donnachie said the statistics are subject to confidentiality requirements set in the regulation.
The Ministry of Public and Business Service Delivery, which oversees Tarion as the government’s delegated administrative authority, said Tarion and the ministry are working to establish a reporting format in order to publish the statistics which is expected to be finalized soon.
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