Cutting the Regulatory Jargon: Key Terms Ontario Homebuyers Should Know
February 25, 2026
Buying a home is exciting, but unfamiliar regulatory language can make the process feel hard to navigate. While these terms may sound technical, they exist for a simple reason: to protect you during one of the biggest financial decisions of your life.
In Ontario, the Home Construction Regulatory Authority (HCRA) licenses and regulates new home builders and sellers. Protecting homebuyers is at the core of this work. The HCRA also provides educational resources and tools to help you navigate the homebuying journey with greater confidence.
Knowing what to look for — and taking time to research before you buy — helps you avoid risks and make informed decisions. Below is a practical guide to three key regulatory terms every homebuyer should understand, why they matter, and how they protect you.
1. “Licensed Builder or Seller”
In Ontario, anyone building or selling a new home must be licensed by the HCRA. This is the law, and it exists to protect homebuyers.
Licensed builders and sellers must demonstrate the knowledge and competency required to build and sell new homes. This includes business planning, project management, and an understanding of building codes. They must also follow a Code of Ethics that sets expectations for professional conduct, including honesty, fairness, and integrity.
These requirements support a positive homebuying experience and give buyers confidence in their builder. Licensing also creates accountability. Because licensed builders and sellers are regulated by the HCRA, homebuyers can file a complaint if concerns arise about a builder’s conduct or competency.
Confirming a builder or seller’s licence should be the first step in your home-buying journey. The Ontario Builder Directory allows you to verify the licence and review background information on more than 7,000 licensed builders and sellers across the province. You can see how long they’ve been in business, how many homes they’ve built, and their professional conduct history. A few minutes of research can go a long way.
2. “Illegal Building” or “Illegal Selling”
If someone builds or sells a new home without an HCRA licence — or fails to enrol the home in the province’s warranty program administered by Tarion — it is considered illegal building or illegal selling. This puts homebuyers at serious risk.
When illegal building or selling occurs, homebuyers may lose important protections. Unlicensed builders operate outside the law without proven qualifications or skills. This may expose buyers to poor craftsmanship, dishonest conduct, and it may limit protection options if something goes wrong.
Holding illegal builders and sellers accountable is a top priority for the HCRA. The HCRA works with municipalities, building officials, real estate professionals, and other regulators to stop illegal activity and hold illegal builders and sellers accountable.
Protecting yourself starts before you buy. Check the Builder Directory to confirm that a builder is licensed and operating legally. If a builder is not listed, that’s a strong sign to pause and reconsider.
Licensing vs. Municipal Building Permits
A municipal building permit confirms that a proposed structure meets local planning and building code requirements. However, it does not confirm that a builder is licensed, qualified, or financially responsible.
If you’re buying a new home in Ontario, always verify that your builder is licensed through the Ontario Builder Directory. A building permit alone is not proof of licensing.
Starting February 16, 2026, the provincial Application for a Permit to Construct or Demolish form will require builders constructing new homes to include their HCRA licence number. Municipalities will be required to use this updated form when processing building permit applications.
Completing this form accurately and truthfully is an important part of protecting consumers. Illegal building remains a serious issue, and verifying a builder’s licence helps protect home buyers from bad actors.
The HCRA continues to work with government, municipalities, and industry partners to address illegal building and strengthen consumer protection across Ontario’s homebuilding sector.
3. “Notice of Proposal”
You may have seen the term Notice of Proposal (NOP) on the Ontario Builder Directory or read it in an HCRA press release. You might be wondering: Is this serious? Should I be concerned?
What Is a Notice of Proposal?
A Notice of Proposal (NOP) is a formal step taken by the HCRA after investigating a complaint. It means the regulator is proposing to take action against the builder’s licence.
That action could include:
- Applying conditions to a licence
- Suspending a licence
- Refusing to issue or renew a licence
- Revoking a licence altogether
Receiving an NOP is serious — and it’s important to know that the builder has the right to challenge it.
Does an NOP Mean the Builder Did Something Wrong?
Not necessarily — but it does mean the HCRA has identified serious concerns that could justify action against the builder’s licence.
Builders have the right to appeal an NOP before the Licence Appeal Tribunal, where an independent tribunal reviews the case. Until that process is complete, the proposed action is not final.
What If the Builder does not challenge the HCRA’s NOP?
The builder has 15 calendar days from the date they are served with the NOP to request an appeal hearing in writing. If they do not request a hearing within that deadline, the HCRA can move forward with the proposed action. That means the licence would be suspended, restricted, or revoked without further proceedings.
What Should Homebuyers Do If a Builder Has Received an NOP?
If you’re considering signing a contract with a builder who has received an NOP, it’s wise to fully understand the situation before moving forward. The NOP has detailed information noting the HCRA’s concerns against the builder. Being informed helps you make confident decisions about one of the biggest investments you’ll ever make — your home.
Protect Yourself as a New Homebuyer in Ontario
Understanding these regulatory terms can help you take an active role in your home-buying journey. Knowing why licensing matters, spotting the risks of illegal building or selling, and using the Builder Directory to check for red flags put you in a stronger position to make informed decisions.
For additional support, visit the HCRA’s Consumer Education & Resource Hub which brings together practical, reliable information from the HCRA and trusted partners. Bookmark it and visit the Hub and use it as a go-to resource as you navigate through your new homeownership journey.