New rules crack down on under-the-table building contractors
By Derrick Penner, Vancouver Sun
Published: Wednesday, November 21, 2007VANCOVUER - The province has tightened the rules governing those who build their own homes to cut off the underground contractors who exploited the practice to build houses for sale.
Violators of the new rules will face fines of up to $25,000 under the new legislation.
The current Homeowner Protection Act requires building contractors to be licensed and provide homeowner-warranty coverage, but exempts people from those requirements if they are building the house they plan to live in.
However, the Homeowner Protection Office (HPO) estimates up to 20 per cent of the 20,973 houses built under the exemption since 1999 were houses really built for sale, with up to one-quarter of buyers who purchased the houses of builder-owners reporting defects in construction.
"[The homeowner exemption] has been abused by people who are essentially in the home-building business," HPO CEO Ken Cameron said in an interview.
"They would build a home under the exemption, then sell it, often just after initial occupancy, then go on after the 18-month waiting period and build another and sell it, then build and sell [again]."
The Homeowner Protection Amendment Act took effect Monday. It still allows people to build their own homes, but receiving authorization from the HPO will require proof that that is their intent, and the application will cost $425.
A builder-owner has to live in a house for at least a year before selling. Then the period a homeowner has to wait before receiving another authorization to build another house will increase from 18 months for the second, three years after that for a third authorization, then five years for a fourth.
Cameron added that builder-owners will also have to disclose that they built their house and that it doesn't have warranty coverage, then face a more specific statutory obligation making them liable for construction defects for up to 10 years after completion.
The authorization for HPO compliance officers to issue compliance orders and hand out fines will also be helpful, Cameron said. Previously the act was enforced in court, which meant having to convince Crown counsel to take the cases on and push them through an already busy court system.
"[Enforcing through the courts] has been cumbersome," Cameron said, "the industry, the underground industry in particular, knew that and that we were increasingly toothless tigers out in the field."
As well, the HPO will create a searchable database that prospective buyers can use to see if the houses they are looking at were built by licensed contractors, or owner-builders.
The new rules were welcomed by the building industry.
"[The new rules] crack down on the abuse of the owner exemption," Peter Simpson, CEO of the Greater Vancouver Home Builders' Association.
Simpson said underground builders give his members, particularly the smaller firms, unfair competition because they don't have to be licensed and pay licensing fees.
depenner@png.canwest.com