For a number of years, Professional Home Inspectors have been categorised as the same group under the Policies laid down by the Workplace Safety and Insurance Board (WSIB) as Construction workers.
Whenever you read, any directives from the WSIB that mentions “Construction Workers”, “Renovators”, “Electricians” or anyone else in the construction industry also applies to Home Inspectors.
Effective January 1, 2013, under the Workplace Safety and Insurance Act, 1997 (WSIA), compulsory coverage under the workers compensation insurance plan extended to independent operators, sole proprietors, partners and executive officers in the construction industry, with certain exceptions. These persons are deemed workers under the WSIA.
Legislation for consumer protection or profit?
The problem is that the WSIB don’t seem to grasp that Home Inspectors are fundamentally different from Construction Workers, and a Home Inspection is likewise fundamentally different from Construction Work. They are aware of the problem.
Along with the Board of Directors at the Ontario Association of Certified Home Inspectors (OntarioACHI) , as well as members from other Home Inspection Associations in Ontario, I have been working in conjunction with my colleagues to get the WSIB to remove the inconsistencies that place Consumers, Realtors, Inspectors and anyone who pays for the inspection, who is at arms length to the home, at risk of litigation from the WSIB.
Needless to say, we have been unable to get the policy makers at the WSIB to change their policies let alone understand either that the risks to a Home Inspector is not the same as the risks to a contractor, or that the risk profile associated with inspecting a home does not change for the inspector just because the buyer will not be moving into the home or someone different is paying.
The WSIB are blaming the WSIA, and placing the responsibility for making the changes into the hands of the Politicians. The Politicians and blaming the WSIB saying they are responsible for administering the policies derived from the WSIA. They are both wrong. While it is well within the scope of the WSIB
to remove this inconsistent risk from the Employer’s Classification Manual, lose reference to Home Inspection is defined in Ontario Regulation 175/98 of the WSIA.
My colleagues and me at OntarioACHI have explained the simple solution to the Minister, his staff and the WSIB, but since 2013 they have failed to act to repair the errors that put the consumer at risk. Even though every two years there is supposed to be policy reviews, the WSIB have failed to act, or even look at the problem with any of the stakeholders. It appears that the mandate for them to be budget neutral by 2017 is taking precedence over what they were originally formed for.
So what are the risks to Consumers, Realtors and the Inspectors?
A glossary of WSIB terms
In order to understand the risks from penalties that can be exacted by the WSIB you first have to navigate the gobbledygook on their website. So here’s a breakdown of the WSIB terminology with respect to Home Inspections.
|Terms used by WSIB||What it means with respect to Home Inspections|
|Principal||The person who is “retaining” the services of the home Inspector. For the purposes on Bill-119 Mandatory coverage in the Construction Industry (for expediency sake I’ll refer to this as “The Act” in future, where a Realtor is arranging the Home Inspection on behalf of their client, the Realtor becomes the Principle.|
|Construction Work||Home Inspection|
|Contractor||Home Inspector or Home Inspection company OR if the Home Inspector is employed by a third party Independent Operator (Mortgage Provider, Relocation company or Broker/Realtor for example), the Contractor is THAT Independent Operator.|
|Sub-contractor||Home Inspector or Home Inspection company|
|Construction||Any industry listed in the Class G – Construction of Schedule 1 (O.Reg 175/98) and/or business activities included in Class ‘G’ in the WSIB’s Employer Classification Manual.|
|Independent Operator||Self-employed home inspector or a Home
Inspector who is the executive officer (as defined by the WSIB) of the Home Inspection company and either is asked to perform more than one non-exempt home inspection during an 18 month period.
|Directly Retained||The inspector MUST be hired by the client or who’s family member (as defined by the WSIB) will be residing in the Home AND who will be receiving the invoices for the Inspection AND who will be paying for the Inspection. If anyone else other than the Home Inspector’s client pays for the inspection, gets and invoice for the inspection or arranges the inspection, the Inspector has not been considered “Directly Retained” and the inspection is NOT exempt.|
|Exempt Home Renovation Work||Exempt Home Inspection; A Home Inspection that is performed by an independent operator (defined above) that performs an inspection on a private residence that is or will be occupied by the person who directly retains the home inspector or a member of that persons family (as defined by the WSIB)|
Now for the penalties
According to the WSIB on their document on Employer coverage, a Principal who fails to comply or contravenes certain sections of the WSIA is guilty of an offence. Such an offence could result in a conviction under the Criminal code of Canada, leaving the Principle with a felony criminal charge and record if found guilty. This could affect the ability to travel freely around the globe.
Similarly, a Home Inspector or hiring Company equally faces charges that can lead to a conviction under the Criminal code of Canada.
The penalties range from recovery of unpaid premiums for the Period covered by the Home Inspection and the three months following, regardless of whether the Inspector performs another non-exempt inspection or not, to fines of up to $25,000 or imprisonment for up to 6 months or both, for individuals, and fines of up to $100,000 for Corporations.
The fact that the rules are inconsistent and can lead a Home Inspector or their client to break the law without knowing is immaterial. So I will try to explain how the inconsistencies work in simple terms, and how to protect yourself against these ridiculous WSIB policies.
Knowing when a Clearance Certificate is required.
A clearance certificate is a certificate with a number that allows a Home Inspector to demonstrate they are registered with the WSIB and pay their premiums on time. As a Principle you will be able to rely on clearances to avoid liability for insurance premiums owing or criminal charges in connection with the service being performed.
Clearance certificates are specific to the Principal-Inspector business relationship.
A Clearance certificate IS NOT required in the following conditions:
- If you are the owner (or tenant with the owners permission) AND resident of a residential home that you are requesting a pre-sale or maintenance inspection on, AND you are paying for the inspection yourself AND you arrange the inspection with the Inspector.
- If you are a prospective purchaser of a residential property that you or a member of your immediate family will be living in AND you are paying for the inspection yourself AND you arrange the inspection with the Inspector.
In both these cases, the Inspector is not required to register with the WSIB, or pay premiums to the WSIB for the inspection and you will not be liable for anything, even if the inspector hurts themselves during the inspection (Unless you are the direct cause of any injury) The WSIB consider the risks in this situation so minimal that they don’t require WSIB coverage for the Inspection.
A Clearance Certificate IS required in the following conditions:
- You are renting, or intending to rent the property being inspected. If at the time of the inspection you are not renting or intending to rent, but subsequently choose to rent without having first lived, or had a member of your immediate family live in the property, the WSIB consider this to be a commercial inspection. You are responsible for informing the Inspector at he earliest opportunity and ensuring you see the Clearance certificate.
- You are intending to purchase a property and your employer or relocation service will be paying the inspection company or inspector for the inspection.
- You are a Realtor and are paying for the inspection on their behalf.
- You pay for the inspection using a company cheque or credit card.
- The inspection is for a commercial property
- The inspection is for a residential property with multiple units and the property is bigger than a fourplex (even if you and/or your immediate family will be living in one or all of the units.
- If the inspection is on a property that does not yet have an occupancy permit (Is still technically not completed with respect to construction)
What a clearance certificate looks like.
Above is an image of the WSIB clearance certificate sent. It is important that the correct principle name is
entered and the property address as well as the validity period. This period MUST encompass the date of the inspection. If the date of the inspection is outside of the validity date of the Clearance Certificate then you are not compliant and subject to penalties as described above.
How to ensure your inspector is registered and in good standing
with the WSIB.
Go to the WSIB website and using the Search function search for the company name of the Inspector. If the company is found, a link should appear at the bottom of the search page like this.
Clicking on the link will give detailed information about the Inspection company.
If the inspection company is either not found, or not eligible to provide a clearance certificate, then you are putting yourself at risk by getting them to perform a home inspection for you if it is not exempt from the WSIB requirements.
Will a non-exempt inspection cost more?
If a Home Inspection company is asked to perform an inspection that is not exempt from WSIB premium payments, that inspection company has to pay premiums not just on the inspection, but on the reported income on ALL inspections from that inspection going forward for three months.
Assuming the reported income for each inspection is around $450 (plus tax) and the inspection company averages 10 inspection per week, premiums would need to be paid on around 120 inspections (10 x 4 x 3). The premium charged to the inspector for that one inspector under these conditions is approximately $1993. It is likely that the Inspector may have to recover some of those costs by increasing the fee of the non-exempt inspection. Some inspectors may choose to refuse to perform an inspection that is not exempt from WSIB premiums. Other Inspectors may chose to flout the law.
At Future Proof Property Inspections we want to protect our clients and inspectors from any liability and consider non-exempt inspections as a standard home inspection with a WSIB administrative handling addition for which we usually add a $124 plus tax charge.
We base this charge on the fact that we perform more than one of these types of inspections each three months and trust that the additional service charge balances out at the end of the year. We could increase our prices across the board, but see no reason why a client who is buying or selling a home for themselves should be penalised because the WSIB considers the risk profile for inspecting a home to be different for an investment property or a gifted service from one that is not.
That said, some Brokerages refer many clients to us, and in this case we average the costs out over the brokerage, so ask us or your Realtor, we may be able to discount this charge.