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Tarion and Your New Build Home Purchase
Kormans LLP
January 4, 2019
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If you are in the market for or have recently purchased a new build home in Ontario, then you may have already heard about Tarion.
Tarion is a corporation that administers and enforces the Ontario New Home Warranties Act (the “Act”) and its regulations. Tarion also provides new home warranty protection to all newly built homes in Ontario, unless the home is exempt from being registered with Tarion. Under the Act, it is illegal for a builder who is not registered with Tarion to enter into an Agreement of Purchase and Sale or a construction contract with a purchaser.
Tarion offers two important protections to new build home purchasers: the deposit protection and the new home warranty.
Deposit Protection
Tarion deposit protection protects purchasers if a builder goes bankrupt, breaches the purchase agreement, or if purchasers have a statutory right to treat the purchase agreement as terminated.
You may want to ensure that your full deposit amount is protected by the deposit protection in case you have to recover your deposit.
Freehold Homes (Deposit Protection)
If your agreement of purchase and sale was executed prior to January 1, 2018, then your deposit is protected up to a maximum of $40,000.00.
If your agreement of purchase and sale was executed on or after January 1, 2018 then the deposit protection will depend on the price of your new home as follows:
1. If your purchase price is $600,000.00 or less, then the deposit protection is up to a maximum of $60,000.00.
2. If your purchase price is over $600,000.00, then the deposit protection is 10% of the purchase price up to a maximum of $100,000.00.
Condominium Units (Deposit Protection)
If you purchased a new build condominium unit covered by Tarion, then your deposit is protected up to a maximum of $20,000.00. Deposit amounts are protected by the trust provisions of the Condominium Act.
Tarion New Home Warranty
The new home warranty provides certain coverages to your new build home that are limited to one year, two year, and seven year warranties. It is crucial to understand what is covered by the warranty and the timelines during which a purchaser’s claims must be made.
Typically, on the closing of your new build home, your builder will provide you with information regarding Tarion, the protections it provides and other relevant information. However, Tarion’s website is also a very informative and helpful resource. You may find a brief summary of the Tarion coverage and the timelines here: Page not found | Tarion.com
To be fully informed and prepared for your new purchase, we recommend that you contact a real estate lawyer to discuss all aspects of your new purchase.
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