Illegal Selling of New Homes in Ontario: What Buyers Need to Know
January 23, 2026Why licensing matters when buying a new home
In Ontario, there are laws that govern who can sell new homes to help protect you as a homebuyer. These laws are designed to ensure that the people selling new homes meet clear standards and can be held accountable if something goes wrong.
The Home Construction Regulatory Authority (HCRA) plays a key role in protecting homebuyers by licensing and regulating the people and companies who build and sell new homes in Ontario.
When someone sells a new home without an HCRA licence, or without enrolling the home in Ontario’s new home warranty program (administered by Tarion), it is against the law and known as illegal selling.
Buying from an unlicensed seller can expose you to risks, which is why understanding these rules can help you make informed homebuying decisions and take steps to protect yourself before and during the buying process.
What protections do new home buyers have in Ontario?
In Ontario, only people and companies licensed by the HCRA are legally allowed to sell new homes.
A home is generally considered “new” if it meets certain requirements – most importantly:
- It was built within the last seven years, and
- It has never been lived in
These requirements exist for a reason. Builder licensing creates accountability and helps protect homebuyers from unnecessary risk. Licensed sellers are subject to HCRA oversight and must meet financial and ethical standards, including honesty and integrity.
How illegal selling commonly happens (and why it’s risky)
One common way illegal selling occurs is through “house flipping” — when someone buys a newly built home but never moves in and then resells it.
Because no one has lived in the home:
- Construction defects may go unnoticed
- Warranty claim deadlines may already be approaching or expired
By the time issues surface, the buyer may be left without important warranty protections.
How to protect yourself before you sign anything
The easiest way to protect yourself and avoid the risks of illegal selling is to verify a seller’s licence before you sign anything.
Use the Ontario Builder Directory
New home buyers can check the Ontario Builder Directory which provides background information on more than 7,000 builders and sellers across Ontario, including:
- Licensing status
- Enforcement history
- Whether projects are enrolled in Tarion’s warranty program
It is one of the fastest and most reliable ways to confirm whether a seller is legally allowed to sell a new home.
How the HCRA protects homebuyers in Ontario
Tackling illegal activity is a major consumer protection issue in Ontario and a top priority for the HCRA. When builders and sellers operate without a licence, it puts the public at risk and undermines a fair and competitive housing market.
When unlicensed selling occurs, the HCRA uses a range of enforcement tools, depending on the circumstances, including issuing penalties or laying charges. These interventions have helped protect numerous consumers.
Example:
The HCRA issued a $379,000 administrative penalty against four individuals for house flipping after they bought two new homes in Northern Ontario and resold them three months later without ever moving in or being licensed. By holding illegal sellers accountable, the HCRA helps deter illegal behaviour and ensures Ontario’s new home market remains fair and transparent, with consumers receiving the protections they are entitled to.
Working with industry stakeholders to stop illegal selling
Protecting homebuyers also requires coordination across the industry.
As part of protecting consumers, the HCRA works closely with many stakeholders, including:
- Real Estate Council of Ontario and real estate professionals
- Local municipalities
- Tarion
Sharing information across these stakeholders helps identify and curtail illegal activity.
What homebuyers should ask before signing a purchase agreement
Illegal selling isn’t always obvious. When you come across homes advertised as “brand new,” it’s important to ask a few key questions:
Has the home ever been lived in?
- Yes: It is a resale home, and the seller does not need an HCRA licence
- No: The seller must be licensed by the HCRA
Is the seller licensed by the HCRA?
If the home is being advertised as “never lived in,” this means the seller is legally required to be licensed by the HCRA. If you have any doubts about the legitimacy of the seller, the easiest way to verify their information is by checking the Ontario Builder Directory.
Is the home enrolled in Ontario’s new home warranty program?
New homes in Ontario come with a warranty of up to seven years. You can check a home’s warranty coverage on the Ontario Builder Directory.
Where can I find more information about a builder or seller?
The HCRA provides tools and resources to help you make informed decisions, including the Ontario Builder Directory — the authoritative source for information on Ontario’s 7,000+ new home builders and sellers.
Using the directory, you can:
- Confirm whether a builder or seller is licensed
- See how long they’ve been an active builder
- View the number of homes they’ve built
- Check for regulatory actions, including charges or convictions
If a builder or seller does not appear in the directory, they are likely to be operating illegally.
Final takeaway for Ontario homebuyers
Taking a few minutes to review the Ontario Builder Directory can help you:
- Avoid purchasing a home that is being sold illegally
- Ensure your builder is licensed
- Confirm your home’s warranty
If something doesn’t seem right, trust your instincts — contact the HCRA or report suspected illegal selling.