What does ethical conduct mean for homebuyers?

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What does ethical conduct mean for homebuyers?

November 23, 2023

What does ethical conduct mean for homebuyers?

The Home Construction Regulatory Authority (HCRA) doesn’t just license home builders and vendors in Ontario, we also regulate their conduct. As of July 2021, the Ontario government introduced a legislated Code of Ethics for home builders and vendors.

Below, we’re breaking down some of the principles of the Code of Ethics. This code is a set of standards that licensed builders and sellers (licensees) must follow.

The Code of Ethics establishes clear standards for how builders and sellers should behave. It outlines what is considered ethical and acceptable conduct for their profession. Anyone not adhering to these expectations may face severe consequences, including losing their licence.

The Code of Ethics sets out 20 expectations of good conduct:

  1. General obligation to comply
  2. Licensee to ensure compliance of directors, employees, agents etc.
  3. Fairness, honesty, integrity
  4. No discrimination
  5. Health and safety of public protected
  6. Conscientious and competent service
  7. Financial responsibility
  8. Unprofessional conduct
  9. Intimidation, coercion
  10. Duty to comply with law
  11. Duty to report charges and findings of guilt
  12. Misrepresentation
  13. Information provided to regulatory authority
  14. Forms and documents
  15. Business records
  16. Obstruction of complaints
  17. Disclosure, marketing, and false advertising
  18. Fees and compensation
  19. Confidentiality
  20. Illegal construction or sale of new homes

Fairness, honesty, integrity

Under the Code of Ethics, licensees must treat new home buyers with fairness, honesty, and integrity, which means their conduct cannot be reasonably construed as unfair or dishonest. The HCRA’s Advisory on Honesty and Integrity is clear: while licensees are in a position of power relative to homebuyers, the HCRA expects licensees to not exploit this power. To make informed decisions during the home-buying process, builders need to provide purchasers with all the facts

For example, it would be unethical for a licensee to mislead a home buyer during a contract negotiation or to recommend that a buyer not obtain legal advice, both of which may influence their decision to sign an Agreement of Purchase and Sale (APS).

Builders must honour their contracts

Consumers also invest their trust (and money!) into the specific skills and expertise of licensees when it comes to purchasing a home. Under the Code, licensees must provide a level of courteous and responsive service to inspire trust and confidence by demonstrating reasonable knowledge, skill, judgment, and competence.

For example, if there is a price escalation. A licensee should clearly communicate to a homebuyer any proposed changes to the sale agreement in a timely manner. This maintains a positive relationship and provides the homebuyer an opportunity to seek legal advice. A lack of communication would be unethical as it limits the homebuyer’s ability to seek legal advice. Also, it is unethical to amend an APS without a purchaser’s consent. The HCRA would consider all of this professional misconduct.

Intimidation, coercion, and obstruction of complaints

The Code of Ethics is also clear that there is no place for intimidation, coercion, or obstruction in the home buying process. Licensees are prohibited from using intimidating or coercive tactics and cannot prevent people from submitting a complaint to the HCRA.

The HCRA’s Advisory on Intimidation, Coercion and Obstruction details several instances of this type of unacceptable conduct. For example, it would be unethical for a builder to pressure or scare a purchaser into signing an agreement before they’ve obtained legal advice.

In addition, licensees are not allowed to prevent someone from making a complaint to the HCRA. It’s a consumer’s right to bring any concerns forward to the regulator. As a result, it would be highly unethical for a licensee to dissuade a consumer from making a complaint by threatening legal action.

Communicate, communicate, communicate!

The HCRA communicates these expectations to licensees through Advisories. Advisories provide practical examples and expectations of the Code of Ethics. They provide clear guidelines so licensees are aware of their conduct expectations. “I didn’t know” is not an excuse!

Licensees are expected to familiarize themselves with Advisories, but they are a resource for consumers too. The HCRA’s Advisory Guide to Good Conduct is a valuable tool for consumers to understand the ethical standards Ontario home builders and sellers must meet. It also provides examples of concerns that may be subject to enforcement.

What can the HCRA do?

The Code of Ethics principles are straightforward, and fortunately, the majority of licensees comply with the Code. In fact, their licence depends on it. To maintain a licence with the HCRA, builders and vendors are required to abide by the Code of Ethics. The HCRA can take action if this code is violated by a licensed builder or seller.

Violating the Code can result in a variety of actions from the HCRA including:

  • Mandating training and education courses
  • Proposing conditions on a licence
  • Imposing an administrative penalty
  • Laying a provincial offence charge
  • Suspending or revoking a licence entirely

The Registrar may refer a matter to the Discipline Committee if the HCRA receives a complaint about the conduct of a licensee and the Registrar believes there may have been an ethics violation.

If you believe a builder or vendor has violated the Code of Ethics, contact the HCRA immediately by filing a complaint using our Complaints Form.