A developer that was facing the risk of over $30 million in penalties from Ontario’s Home Construction Regulatory Authority (HCRA) has had all charges against it dismissed.
In the largest case ever presented to the HCRA’s discipline committee, Briarwood Development Group was accused of breaching the province’s ethical standards for home builders by pressuring 142 buyers to pay higher prices for pre-construction homes, for which they had already provided deposits and signed contracts, ultimately collecting more than $18 million.
Last month, all allegations against Briarwood were either dismissed or withdrawn after the HCRA could not substantiate its claims or provide compelling evidence.
Briarwood’s legal team is celebrating this outcome and asserts that the developer dealt ethically and transparently with its customers.
In contrast, numerous buyers and advocates argue that this result highlights the HCRA’s failure to effectively regulate the sector and are urging the province to intervene. Some buyers who rejected Briarwood’s price hike maintain that they are still in a state of uncertainty years later, without their homes.
“This sets a terrible precedent for future buyers,” commented Toronto real estate attorney Bob Aaron, who has represented clients who purchased homes from Briarwood. “Buyers need assurance that what they sign is what they will receive.”
Allegations date back to 2022
Briarwood faced allegations related to pre-construction projects in four Ontario areas: Stayner, Angus, Quinte West, and Georgina.
CBC first reported in 2022 about buyers who had already entered into agreements with Briarwood and then encountered demands for additional payments from the developer. The buyers stated they were given two choices: pay more or terminate the sales agreement completely.
Briarwood has claimed that the price increases were attributable to supply chain disruptions and escalating costs during the COVID-19 pandemic.
After receiving numerous complaints, the HCRA claimed that 142 buyers were coerced into paying higher amounts. The regulator asserted that this was a violation of the ethics code outlined in the New Homes Construction Licensing Act, which mandates builders to “treat every person the licensee deals with fairly, honestly, and with integrity.”
The HCRA presented its allegations to its discipline committee, which operates independently of its staff.
If the committee had determined that Briarwood breached the ethics code, the developer could have been compelled to reimburse the more than $18 million to the affected buyers, in addition to facing potential fines of up to $100,000 per count, totaling over $32 million.
Real estate lawyer Bob Aaron expressed his disappointment regarding the case’s outcome and the precedent it sets for developers and homebuyers. (Craig Chivers/CBC)
Buyers, including those who paid extra and those who declined, were anxiously awaiting the decision.
“I was hoping the regulatory authority would compel them to honor the contract because a contract is a contract, and the terms must be upheld by both parties,” stated Jagat Patel, who, along with his wife, refused to pay an additional $175,000 for a house in Stayner that is still incomplete six years later.
HCRA failed to provide evidence
Patel is now feeling disheartened and uncertain about his next steps.
During the discipline committee hearings, the HCRA’s case unraveled. Its expert witness, intended to discuss the COVID-19 pandemic’s effects on developers, was disqualified after Briarwood’s attorneys successfully argued that he lacked relevant expertise regarding residential construction.
The HCRA provided evidence concerning 14 of the properties, including testimonies from six buyers of five properties. However, it failed to present direct evidence pertaining to the remaining 128 properties.
When Briarwood’s lawyers questioned HCRA’s acting manager of inspections, Justin Vetro, about specific buyers, he admitted he had not directly contacted them for evidence. He also stated he was unaware whether the regulator had reached out to any of the remaining 128 purchasers.
Lawyer Justin Nasseri asserts that his client, Briarwood Development Group, acted in good faith while negotiating with buyers. (Sarah MacMillan/CBC)
Justin Nasseri, one of Briarwood’s attorneys, informed CBC News that buyers had the “time and space” to make their decisions and signed the amendments voluntarily. He further contended that his client was being “proactive” by being transparent about its financial challenges and attempting to find agreements that would benefit everyone. He noted that the potential fines could have led to his client’s bankruptcy and would have represented a “death sentence” for the developments.
<p“It was astonishing to see them [HCRA] adopt such an aggressive stance when they lacked witnesses testifying to any alleged misconduct for most of the allegations,” Nasseri remarked.
Briarwood’s legal team filed a non-suit motion regarding 128 of the counts, citing insufficient evidence. The committee accepted this motion, resulting in the dismissal of those counts.
Days later, the HCRA withdrew the remaining 14 counts as part of a resolution. Neither the HCRA nor Nasseri disclosed what the resolution entailed.
Regulator defends investigation
Upon hearing the outcome, Aaron, the real estate attorney, expressed his belief that the HCRA “dropped the ball very badly” by not gathering and preparing sufficient evidence.
The HCRA declined CBC Toronto’s request for an interview. When asked why staff did not gather evidence from most buyers, communications director Tess Lin responded via email, stating, “we followed the process diligently and presented the facts available to us.”
Lin expressed that the outcome was “disappointing” but affirmed that the regulator “will apply lessons learned from this case to enhance our approach to future referrals.”
MPP Tom Rakocevic, the NDP critic for public and business service delivery and procurement, said he was “shocked and disappointed” by the outcome and expressed concerns about the regulator’s ability to adequately safeguard home buyers.
“Perhaps they need to change team members and staff to be able to carry this forward. How is it that they do not have sufficient evidence?” Rakocevic questioned.
Ontario Premier Doug Ford had previously vowed to crack down on builders who raise prices for pre-construction buyers. CBC Toronto reached out to his office to inquire whether he is satisfied with HCRA’s performance in protecting home buyers. Ford’s office did not reply but passed the request to the Ministry of Public and Business Service Delivery and Procurement. In an email, a spokesperson indicated that the HCRA operates independently from the government and directed questions to the regulator.
Litigation last option for buyers
Jagat Patel, the home buyer who refused to pay more, is uncertain if he will ever receive the house he envisioned in Stayner. He and his wife were eager to leave their Brampton residence for a more affordable home and community to enjoy a quieter lifestyle while supporting their children’s education.
Patel is among those who filed complaints with the HCRA. With the discipline proceedings now concluded, the regulator has stated there are no further actions it can take.
Patel mentioned that Briarwood has not responded to his recent emails.
In 2019, Jagat and Vidhi Patel signed a purchase agreement for a pre-construction home in Stayner, Ont. They still do not have the home. (Submitted by Jagat and Vidhi Patel)
Nasseri stated that he could not comment on ongoing discussions between Briarwood and any individual buyers.
Nasseri indicated that buyers always have a third option if they refuse both the price increase and the choice of signing an agreement to cancel the contract.
“You can insist on your contract,” Nasseri advised. “You can litigate.”
Patel mentioned that hiring a lawyer will likely be his next step, though he is uncertain if they will have the means to afford one.
