Ontario developer charged for ‘illegal sale' of hundreds of pre-construction homes
The
Home Construction Regulatory Authority
(HCRA) announced Tuesday that it has laid charges against seven companies operating under StateView Homes and the firm's three senior executives.
Before a builder can sell a new home in Ontario, it must obtain a licence from the HCRA and receive approval from
Tarion
in what's known as a Qualification for Enrolment (QFE).
It is a provincial offence to sell a home without both authorizations.
'Compliance with all regulatory requirements is not optional. Builders who do not meet these obligations are operating illegally, and the HCRA will take strong enforcement action,' said Wendy Moir, the HCRA's Chief Executive Officer and Registrar.
An October
2023 Star investigation
found StateView collected tens of millions of dollars in deposits from homebuyers for hundreds of homes that it did not have authorization to sell. In at least one case, the developer solicited deposits for unbuilt houses on land StateView did not yet own, the Star found.
StateView Homes did not immediately respond to questions about the HCRA charges. The company previously told the Star that it worked diligently to make sure that it had the required approvals for any development.
Under a controversial new rule, some homebuyers may end up getting less deposit coverage if things go awry with their builders.
Under a controversial new rule, some homebuyers may end up getting less deposit coverage if things go awry with their builders.
StateView, led by brothers Dino and Carlo Taurasi, underwent a rapid expansion around 2020 before unspooling into collapse. Eight StateView-affiliated companies have been put under receivership, and most of the pre-construction developments they marketed between 2020 and 2023 have never been built.
The Taurasi brothers, as well as former CFO Daniel Ciccone, are also charged with failing to take reasonable care to prevent the violations, the regulatory authority said. A lawyer who represents Ciccone did not immediately respond to request for comment.
The HCRA began investigating StateView in 2023 and has since suspended its licences.
The regulator said that the scale of StateView's alleged violations and the ensuing financial harms prompted the agency to pursue charges against both the company and its leadership.
Hundreds of homebuyers were left without the homes they put deposits on – and without the money they forked over. According to an unaudited report filed in StateView's receivership proceedings, the developer collected $50.6 million in deposits for five free-hold projects between 2020 and 2023.
These spurned buyers have turned to Tarion, Ontario's protection agency for new home buyers, to be compensated for their lost deposits.
There has been a surge in deposits lost in recent years to illegal sales, prompting Tarion to introduce a controversial change to its compensation formula for deposit coverage.
Left unchecked, Tarion warned it might not be able to afford to cover homebuyers' losses. So the agency introduced a new requirement for purchasers of new freehold homes to notify the agency within 45 days after entering into a purchase agreement. If they fail to do so, they may face reduced deposit coverage should anything go wrong with the development.
Tarion has said the measure, set to kick in on July 1, will help the agency identify illegal sales earlier in the process. Consumer advocates, however, say instead of punishing homebuyers, regulators should better proactively police the industry to catch rogue developers.
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