Builder charged with allegedly selling homes without a licence

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A Toronto-area real estate developer is facing 10 charges of selling homes without a licence.

The charges, filed by Ontario’s Home Construction Regulatory Authority (HCRA), and an additional 11th charge of failing to produce evidence described in a warrant, were the first official enforcement action by the new agency, established in February. The charges have signaled to some in the industry that it may not be business as usual anymore for homebuilders in the province.

Ideal Developments’ CEO Shajiraj Nadarajalingam, who also goes by the name Shaji Nada, said he was shocked to hear his company is facing charges. “Even [my] lenders, they are asking ‘What is this about? It never happened this way in the past … why are you being targeted,’” Mr. Nada said.

The charges have been filed against a subsidiary called Ideal (BC) Developments Inc., and Mr. Nada will have the opportunity to defend his company’s conduct in provincial offenses court on Sept. 10.

At the same time, he claims representatives from the HCRA described the potential fines that arise from the charges as a “speeding ticket,” or fees he’d have to pay to carry on his business. Mr. Nada’s company has two other active licensed projects, both of which are in the process of a licence renewal application.

“Under the act and regulations we expect builders to have a high standard of conduct; if they don’t, it can absolutely affect their licence. There’s a number of things we can do,” said Wendy Moir Acheson, chief executive officer and registrar of the HCRA. Options for discipline can include educational seminars for builders, referral to a disciplinary committee and seeking conditions on any future licences. “In the most serious cases we could issue a proposal to revoke a licence. In situations where we really think the licensee should not be licensed or where the existence of them as a licensee would be a threat to public protection,” Ms. Moir Acheson said.

The HCRA said the charges against Ideal could result in maximum penalties per count of $250,000 in fines and jail sentences of two years less a day.

The allegations are still to be proved in court, but according to the HCRA the charges stem from complaints from buyers in Mr. Nada’s Boss Luxury Towns project at Yonge Street and Bond Crescent in Richmond Hill. The 72 townhome project has struggled to get off the ground since it was started in 2014. In 2019, lenders who had backed the project sought to appoint a receiver to recover $13-million in loans after Ideal missed payments, though ultimately Mr. Nada managed to have that insolvency process discharged.

Mr. Nada claims that in August, 2020 the previous builder licensing body, Tarion, gave him a pending designation on the licence for Ideal (BC). When the HCRA came into force in February he reapplied for a licence, a decision on that application is still pending.

The HCRA said the charges against Ideal could result in maximum penalties per count of $250,000 in fines and jail sentences of two years less a day.

“It’s not like I just became a builder last month and started selling. I’m a Tarion builder for the last 10 years,” he said. “Tarion was much easier before … in those days there was not too much of the scrutiny.” That said, Mr. Nada claimed he couldn’t remember if he had ever sold units while a licence application was still in process in any of his previous projects over the past decade.

Mr. Nada’s companies have been the subject of complaints from buyers when proposed developments failed to be completed. In some reports, as many as 600 agreements of purchase and sale for condo or townhouse units with Ideal have been cancelled. Mr. Nada disputes those figures, suggesting in some cases units were cancelled after his companies sold their interests in the projects. From a high of 11 building projects in 2017, he now has only three projects he’s working to finish, including Ideal (BC).

David Moorcroft, a public relations expert with Strategy2Communications, who is working for Mr. Nada said that his client made a mistake with the sales. “Ideal never intended to break any rules. In this regard, Shaji believes that regulators should work co-operatively with developers to help them obtain the necessary project approvals in a timely fashion and remedy any shortcomings, rather than blindsiding them in pubic with allegations and potentially damaging their reputations,” he wrote in a statement.

The creation of the HCRA came after years of criticism from home-buyers that Tarion maintained too-cozy relationships with the builders it was supposed to regulate. By breaking out the regulatory function from Tarion’s new home warranty insurance role the new organization was supposed to provide more independent information about the performance of home-builders.

Long-time critics of Ontario’s builder regulations are cautiously optimistic the new agency is moving in the right direction.

“So far the reaction is: Good, they are finally doing something,” said Karen Somerville, president of the activist group Canadians for Properly Built Homes. “It’s been six, seven months since they opened the door, and we’d been expecting a lot more a lot sooner frankly.”

One of Ms. Somerville’s chief concerns – that the home builder registry still doesn’t have all the information consumers need to protect themselves – is reflected in the case of Ideal. Despite the charges against it, Ideal (BC) isn’t listed among subsidiaries of the Ideal umbrella company, and despite many consumer complaints about several cancelled projects Ideal appears to have a mainly clear record on HCRA’s registry.

Ms. Moir Acheson agrees there’s more to be done, as the new agency reaches a steady state of operations and begins to review more applications, more builders and take more complaints from consumers.

“We want to be a modern and smart regulator that’s fair, consistent and really responsive to both consumer needs and the industry itself, and make sure builders can be as professional and as competent as they can be,” she said.

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