What You Need To Know About The Tarion New Home Warranty
Building a home is an exciting journey, but it comes with its own set of challenges. If you’re planning to build a new home in Ontario, one of the most important things you need to know about is the Tarion New Home Warranty Program. This not-for-profit, consumer protection organization, established by the Ontario government, is designed to ensure that homeowners are protected when they purchase a newly built home.
Here’s what you need to know to navigate the Tarion New Home Warranty and understand how it safeguards your investment.
What Is Tarion?
Tarion is responsible for administering Ontario’s mandatory new home warranty program. By law, all new homes built in Ontario must be provided with a warranty by the builder. Builders are required to register for this program before construction begins. The warranty helps protect homeowners by covering several important areas, including deposit protection, delayed closing compensation, and warranties related to the work and materials used in the home.
The Tarion warranty is structured into three coverage periods: one year, two years, and seven years. As this program is complex and must be followed precisely, it’s highly recommended to consult a lawyer who can review the documents provided by your builder to ensure you’re fully informed before making any commitments.
Deposit Protection
One of the key benefits of the Tarion warranty is its deposit protection. If your builder goes bankrupt, breaches the purchase agreement, or if you have the legal right to cancel the agreement, Tarion offers protection on the deposit you’ve given to your builder.
If your purchase agreement was signed before January 1, 2018, your deposit is protected up to $40,000. For homes purchased after this date, the protection has increased based on the home’s value:
- Up to $60,000 for homes valued at $600,000 or less.
- 10% of the purchase price, with a maximum of $100,000 for homes over $600,000.
This deposit protection ensures that if things go wrong, you aren’t left high and dry.
Delayed Occupancy Coverage
Delays in the closing or occupancy date of your new home can be frustrating and expensive. Moving costs, accommodation fees, and storage can add up quickly. The Tarion warranty offers delayed occupancy coverage to compensate you for these unexpected expenses.
If the builder fails to provide proper notice of a delay or the completion of your home is delayed beyond the agreed date, you could be entitled to compensation. Claims related to delayed closings can provide compensation of up to $7,500, depending on the circumstances.
Understanding the Warranty Coverage
Tarion’s warranty coverage is broken down into three main periods: one year, two years, and seven years. Each period offers different types of protection to ensure your home is built to standard and that you are protected against certain defects.
One Year Warranty
The one-year warranty ensures that your home is free from defects in materials and construction. It covers:
- Proper construction and work to code.
- The home being fit for habitation.
- Protection against violations of the Ontario Building Code.
- Protection against unauthorized substitutions of materials.
The one-year warranty begins on the date you take possession of the home, even if you sell it within the year.
Two Year Warranty
The two-year warranty goes further by covering:
- Protection against water penetration through basement or foundation walls.
- Defects in work or materials, such as windows, doors, caulking, or plumbing systems, that lead to water penetration.
- Protection for defects in electrical, plumbing, and heating systems.
- Coverage against issues with exterior cladding like brick or siding.
- Protection against violations of the Ontario Building Code that affect health and safety (e.g., fire safety, insulation, structural integrity).
This warranty is valid for two years from the date of possession.
Seven Year Warranty
The seven-year warranty is perhaps the most critical coverage, as it protects you against major structural defects. This includes:
- Defects that affect load-bearing elements of the home, which could lead to structural failure.
- Defects that compromise structural load-bearing elements, even if failure is not immediate.
- Defects that materially affect the use of a significant portion of the home.
This coverage is valid for seven years from the date you take possession of your new home.
Key Points to Keep in Mind
The Tarion New Home Warranty offers crucial protections for homeowners, but it’s important to note that it is a limited warranty. Claims must be made within the appropriate warranty periods, and the warranty does not cover normal wear and tear or damage caused by improper maintenance.
Before purchasing a new home, always make sure to review all warranty documents carefully. Consulting a lawyer can help ensure you understand the details and are fully protected.
For more detailed information, visit the Tarion website and be sure to discuss your home warranty with your builder before you commit.