Building a home in Ontario? Be sure to do your due diligence surrounding the Tarion New Home Warranty Program.
Tarion is a not-for-profit consumer protection organization established by the Ontario government to administer the province’s new home warranty program. Tarion’s role is to ensure that buyers of newley built homes are protected. By law, all new homes built in Ontario must be provided with a warranty by the builder, who must register for the program prior to construction.
The warranty program provides coverage for homeowners relating to deposit protect, delayed closing compensation and warranties on work and materials. Warranties surrounding work and materials come into effect on the date you take possession and are subsequently divided into the 1, 2 and 7-year coverages.
As the warranty program is complex and must be strictly adhered to, we always suggest consulting a lawyer to review the documents provided by the builder.
Tarion protects the deposit your give to your builder up to a certain limit in the event that the sale is not completed because:
- your builder goes bankrupt;
- your builder fundamentally breaches the purchase agreement; or
- you have a statutory right to treat the purchase agreement as terminated.
If you signed your purchase agreement before January 1, 2018, your deposit is protected by Tarion up to a maximum of $40,000. Anything after 2018 follows the following protection structure, up to $60,000 for homes $600,000 or less and then 10% of the purchase price, with a max of $100,000 for homes $600,000 or more.
Delayed Occupancy Coverage
Delays in your closing or occupancy date can cost you unexpected accommodation moving and storage fees. The new home warranty’s delayed closing/occupancy coverage ensures that you are compensated if your builder does not provide sufficient advance notice of a delay or if the completion of your home is delayed beyond a certain date. Applicable claims relating to a delayed closing, can provide compensation up to $7,500.
➤ For more information on new builds read:
One Year Warranty
- Requires that your home is built properly and free from defects in materials
- Ensures your home is fit for habitation
- Protects against Ontario Building Code violations
- Protects against unauthorized substitutions
- Applies for one year, beginning on the home’s date of possession even if the home is sold.
Two Year Warranty
- Protects against water penetration through the basement or foundation walls
- Protects against defects in materials, including windows, doors and caulking, or defects in work that result in water penetration into the building envelope
- Covers defects in work or materials in the electrical, plumbing, and heating delivery and distribution systems
- Covers defects in work or materials that result in the detachment, displacement, or deterioration of exterior cladding (such as brick work, aluminum, or vinyl siding)
- Protects against Ontario Building Code violations that affect health and safety including but not limited to fire safety, insulation, air and vapour barriers, ventilation, heating, and structural adequacy
- Applies for two years, beginning on the home’s date of possession
Seven Year Warranty
Provides coverage against major structural defects. These include:
- Defects in work or materials that affect a structural loadbearing element of the home, resulting in an actual structural failure
- Defects in work or materials that materially compromise a structural loadbearing element of the home, even if failure has not occurred or is not imminent
- Defects in work or materials that materially and adversely affect the use of a significant portion of the home
- Begins on the date you take possession of the home and ends on the seventh anniversary of that date
It is important to note that it is a limited warranty, and claims must be made during the applicable warranty period. The warranty does not cover normal wear and tear, or damaged caused by improper maintenance. For more information, visit Tarion’s website and ensure you consult with a lawyer to review documents prior to purchasing, or starting your project.
➤ For more resources on construction and building a home read:
- 4 Essential Steps To Building A House In Ontario
- The Real Cost Of Building A House In Ontario
- When Is A Building Permit Required In Ontario?
- Understanding Construction Mortgage Loans In Ontario
There are also limitations to what type of new build homes the warranty applies to. New home warranties apply to new builds only, not;
- Homes built on existing foundations (40% or more)
- Owner built or pre-occupied homes (homes lived in by the builder prior to being sold)
- Homes not completed 100% by the registered builder (ex: builder completes the shell, and the owner does the rest, or hires another contractor)
Additionally, if you buy a home that is still in the warranty period it is important to know that the warranty, while still valid, does not automatically transfer to you. You will need to call Tarion to have your name added on file as the new owner.