What New Home Buyers Should Know about Tarion Warranty Corporation
If you’re a new home buyer in Ontario, you’ll be pleased to learn that Tarion Warranty Corporation is working to safeguard your investment.
Tarion helps protect consumers and regulates new home builders and sellers by administering and enforcing the Ontario New Home Warranties Plan Act and Regulations.
The legislation sets out the limited warranty protection builders and sellers must provide to home buyers.
Tarion plays several roles. For example, it licenses new home builders and sellers, and helps ensure they obey the legislation. It informs consumers about warranty rights, looks into illegal building practices and promotes good new home construction standards.
Perhaps its best-known roles, though, are to back warranty protection—and, when called on, to help new homeowners and builders resolve problems with new homes or to fix the problems itself.
Generally speaking, the Ontario New Home Warranties Plan Act covers all new homes. It doesn’t cover renovated, previously occupied and some other types of home. And it doesn’t cover what it lists as items and deficiencies, including normal wear and tear, and damage for reasons such as poor maintenance.
The legislation may entitle a home buyer to one, two and seven-year limited warranties, plus deposit protection and delayed closing compensation.
The One Year Warranty addresses construction practices and defects, unauthorized substitutions and the fitness of a home for habitation, among other points. The Two Year Warranty addresses topics such as defects and violations of the Ontario Building Code to do with health and safety. The Seven Year Warranty concerns major structural defects.
The upper limit of the warranty protection is $300,000. Common elements of a condominium have separate coverage of up to $2.5 million.
The builder pays for the fee for Tarion warranty protection for a home—and may pass this along to the buyer. The fee amount, which ranges from $385 to $1500, reflects the price of the home.
Filing a warranty claim
A buyer receives warranty information when taking possession of a new home. To ask Tarion for help with a warranty coverage dispute, the homeowner follows a statutory warranty process. A homeowner can manage a warranty online.
In 2013, Tarion paid out 413 claims with a value of $7.3 million. Claim payments included $3.2 million for materials and workmanship in the first year and $1.7 million for major structural defects. About a quarter of the claims were from those who had bought homes build illegally. To put these figures in context, last year Tarion had 370,357 homes under warranty. There were 49,856 new home possessions.
Tarion reports that claims activity has declined over the years. Homeowners and builders are resolving more claims directly.The highest numbers of first-year material and workmanship claims paid in 2012 and 2013 were for paint, doors, floors, drywall, stairs/steps, water/moisture, concrete, baseboards, trims, and cabinets and vanities.
For more information
The Tarion website offers a wealth of information. And, of course, if you have a question you can contact Kelly Santini directly.
Here are links to some of the most common questions we receive:
- A guide to our services when you are purchasing a home
- A guide to our services when you are selling a home
- When should I contact my lawyer and what info will they need to complete my purchase?
- Handling utilities and insurance when purchasing or selling a home.
- Title insurance: the basics
- Non-residents guide to purchasing real estate in Canada
Still have questions? Please contact a member of ou residential real esate team. We'd be pleased to help.