Advisory 15 – Legal Requirements for Sellers of New Homes
Last Updated: July 10, 2025
In Ontario, all new home builders and sellers are required by law to be licensed by the Home Construction Regulatory Authority (HCRA). Licensed sellers must also obtain approval from Tarion for each new home sale and enrol the home in Ontario’s new home warranty program.
Only licensed builders and sellers have demonstrated that they meet the HCRA’s competency requirements and are held to professional standards under the HCRA’s Code of Ethics. Operating without a licence is illegal and undermines essential consumer protection measures.
By law, most new homes in Ontario come with seven years of warranty protection, beginning when the new home is first occupied. However, selling a new home without a licence can make it difficult for future homebuyers to report construction deficiencies – particularly within the critical first 30 days of occupancy.
HCRA Enforcement Actions
When the HCRA becomes aware of situations involving the illegal sale of new homes, it takes enforcement action.
For example, the HCRA issued a $181,000 administrative penalty against one individual who built and sold a new home without a licence and without enrolling the home in the warranty program. The individual had built a new home under the premise that they intended to occupy it. The individual then listed and sold the new home shortly after completing construction. As a result, the HCRA ordered the unlicensed seller to pay a base penalty amount of just over $23,000, and a monetary benefit amount of over $150,000.
The HCRA also issued a $379,000 administrative penalty against four individuals who purchased and sold two new homes in Northern Ontario without a licence. The individuals had purchased the new homes, never moved in, and then sold them three months later without being licensed by the HCRA. As a result, the HCRA ordered the unlicensed sellers to pay base penalty amounts of over $28,000 and a monetary benefit amount of over $216,000.
Who is a Seller:
According to the Ontario New Home Warranties Plan Act (ONHWPA), a vendor (seller) is:
- A person who sells a new home which has not been previously occupied.
This definition is important for several reasons:
- The New Home Construction Licensing Act, 2017 (NHCLA) requires anyone selling a new home that has not been previously occupied to be licensed with the HCRA.
- In addition to licensing, sellers must also receive confirmation from Tarion that the home qualifies for enrolment under the ONHWPA before entering into a purchase agreement.
- Sellers of new homes are responsible for providing the warranty protection available under the ONHWPA.
Potential Actions by the HCRA:
Monetary penalties are one of the enforcement tools the HCRA may use to require builders and sellers to comply with the rules. This is in addition to other measures available to the HCRA, such as laying charges and issuing compliance orders.
Protecting Consumers and Upholding the Homebuilding Industry:
The HCRA encourages all new home buyers to check the Ontario Builder Directory – a database hosted by the HCRA – to confirm that their builder or seller is licensed and to review their record, including any charges or convictions issued by the HCRA.
The HCRA also advises consumers to be aware of all legislative requirements, as these may extend to individuals who resell new homes.
For more information on the definition of a vendor (seller), please refer to Advisory 5 – Common Definition of “Vendor” on the HCRA’s website.
To learn more about warranty coverage and timelines, visit Tarion’s website.