Did you know that according to Trading Economics, between the years of 2017 and 2018, the homeownership rate in Canada went up to 68.55% from 66.30%? This was a huge amount, compared not only to 2017 but also to 2016, 2015, 2014, 2013, and 2021.
If you’re thinking of joining these Canadian homeowners and buying a home that’s a new construction directly from a builder, you might have some reservations about the quality of your home.
After all, how do you know that the construction will be high-quality? It’s stressful to have to worry about this.
Fortunately, the private non-profit organization Tarion can help you with their New Home Warranty Program.
In this article, we’ll review everything you need to know about the Tarion New Home Warranty Program, so you can make it work for you.
Finally, you can buy a newly constructed home that has quality construction and move in. Read on to learn more.
What Is Tarion?
Tarion is an organization, empowered by the Canadian government, that ensures builders follow the Ontario New Home Warranties Plan Act and Regulations. The idea is to protect you, the consumer when you’re buying a newly constructed home.
The quality of the builds has to follow certain guidelines set out by Tarian.
As a result, in addition to helping out consumers, this program also educates and regulates builders.
This new home warranty program in Ontario is now mandatory for every new home build constructed in Ontario.
Even though many people think this is a new program because of recent rebranding and marketing, it’s actually been around since the 1970s. However, many recent changes occurred in the 2000s.
Currently, there are four areas that Tarion focuses on. First, they bring awareness to builders and homeowners about the Customer Service Standards and Building Code Standards.
Second, by using enforcement of warranties, the organization provides homeowners and builders with resolution options for disputes.
Third, the organization regulates new home builders’ licenses in Ontario, ensuring that they meet expertise and customer service standards, as well as being able to financially handle the project they’re taking.
Fourth, if there are any illegal homebuilders, the organization will investigate and prosecute them.
If they are working and haven’t registered with the organization or enrolled in new construction, they can be fined a maximum of $10,000.
How the New Home Warranty Program Works
When you use the Tarion New Home Coverage Program, you get access to warranty coverage, deposit protection, and protection for freehold buyers against delayed closing. We’ll review each of these in detail now.
On the closing date for a new home and the available occupancy date for a condominium, your warranty coverage with Tarion takes effect. If you’ve purchased a condominium, additional areas such as common elements (shared areas) are also covered.
The common elements coverage starts on the date someone registers the condominium corporation. (Note that this usually occurs a bit later, a few months after the condominium has available occupancy.)
$150,000 is the maximum amount of coverage you can get for your new residence.
There are three types of warranties available: one-year, two-year, and seven-year.
One-Year Warranty Protection
When you sign up for this program with Tarion, you’re covered for a year starting on the date that you had the entitlement to occupy your home. Coverage includes that your home meets the requirements of the Ontario Building Code. It also covers:
- The home is fit for you to live in
- There are no defects in workmanship and materials
If in the first year, there are any shrinkage crack issues with your ceilings or walls because of corner bead splits or settling, you’ll be covered for a repair. Note that this repair does not include replacements or repainting.
Additional Coverage with One-Year Warranty Protection
This warranty also covers electrical issues, such as improper installation or material defects related to breakers, electrical panels, duplex outlets, light switches, and wiring. However, alterations and new circuits or breakers are not covered.
It also covers plumbing issues, such as improper installation or material defects related to shut-off valves, soldered joints, drains, and copper piping.
Depending on the situation, faucet and plumbing fixture finishing might also be covered.
However, if you cause a plumbing issue yourself, this will not be covered.
Ill-fitting or warped interior doors are covered (except for cabinet doors and closet sliders). Note that expansion and shrinkage can occur naturally because of humidity levels, and the doors often return to normal after a year.
When it comes to bathroom and kitchen fans that are not performing correctly, these will be covered as long as they haven’t experienced any dirt or grease build-up.
Finally, in terms of appliances, these will be covered instead by the manufacturer, following the manufacturer’s warranty.
Two-Year Warranty Protection
With this program, you get coverage for two years if your home was constructed on January 1st, 1991, or after. It provides coverage for water seeping through foundation or basement walls. If you have a condominium, this also applies to:
- Parking garages
- Other areas that are below ground
Additionally, work and material defects in doors, windows, and caulking that protect the building from water penetration will be covered. Work and material defects in heating distribution and delivery systems, plumbing, and electrical systems are covered too.
Work and material defects that cause the deterioration, displacement, or detachment of exterior cladding are also covered.
Finally, there’s coverage for any violations of the health and safety provisions of the Ontario Building Code.
Seven-Year Warranty Protection
With this program, you get coverage for seven years if your home was constructed on January 1st, 1991, or after. You’re covered for major structural defects. The definition of this term can be found in the Ontario New Home Warranties Act, which we’ll cover now.
Any work or material defect that adversely or significantly affects your ability to use your building as your home is a major structural defect.
Additionally, any work or material defect that creates the home’s structure’s load-bearing part to fail is a major structural defect.
When you use the Tarion New Home Warranty Program, you also get deposit protection. The moment you pay your deposit, the coverage begins. The maximum for this protection is $40,000.00, and it protects you from financial loss after buying your new freehold home.
Note that the maximum is $20,000.00 if you signed your purchase agreement before the 1st of February 2003.
As for condominiums, the maximum is $20,000.00. This is because of the Condominium Act—specifically, the provisions covering the trust and excess deposit.
Protection for Freehold Buyers Against Delayed Closing
If you’re a freehold buyer, you also get protection so that the closing isn’t delayed. Even though the builder can extend the closing date a maximum of 120 days whenever they want before closing, they need to first provide you with a written notice.
If they don’t, then you could potentially get compensation for any expenses that were out-of-pocket. You will have to wait to make this claim until you’re the actual owner of the property, however.
If the builder wants to delay the closing by over 15 days needs to provide you with notification of this change a minimum of 65 days before the first official closing date and provide you with a new one.
This delay can be 125 days or fewer once.
If the delay is fewer than 15 days or 15 days exactly, the builder needs to provide you with notification of this change a minimum of 35 days before the first official closing date and provide you with a new one.
When it comes to closing delays that are last-minute, there is a five-day grace period for the builder, making it not necessary for them to pay a penalty.
However, outside of this, if the builder doesn’t provide you with notice properly, they will have to pay out $100 daily for daily living expenses compensation to you, and direct costs related to the daily.
The maximum amount you can get when this occurs is $5,000.
Need More Information?
Now that you’ve learned about the Tarion New Home Warranty Program, you might want more information. Maybe you want help figuring out which warranty is the best option for you when you buy your new home from a builder.
Or maybe you want to know what steps you can take during the sale process of the home to make sure you’re legally protected.
Whatever you need, we can help. At Minhas Lawyers, we’re experts when it comes to real estate law. We also offer legal services. To learn more about how we can help, contact us now.
Minhas Lawyers LLP is a multi-practice law firm based in Mississauga. We advise and represent clients across various segments and practice areas.
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