One of the biggest perks of buying a new construction condo or property in Ontario is Tarion Warranty. It is a government-backed program designed to protect homeowners from unexpected issues in their newly built homes. It protects you from any unexpected issues, from minor defects to major structural concerns and lasts up to 7 years.
Understanding the Tarion Warranty can feel overwhelming, and many new homeowners miss out on using it when they need it most. Consider this guide your ultimate handbook to navigating the Tarion Warranty with confidence.
What Is the Tarion Warranty?
The Tarion Warranty is a government-regulated program that protects Ontario homeowners who purchase newly built properties. Builders are legally required to enroll all new homes in the warranty program, which ensures quality construction and provides financial support for defects or issues that may arise after you move in. Administered by Tarion, this program operates under the Ontario New Home Warranties Plan Act and serves as a safety net for buyers. You pay for the warranty as part of your purchase price.
Unlike home insurance, which protects against unforeseen events like fires or floods, the Tarion Warranty focuses on problems caused by construction deficiencies. It also ensures that builders adhere to Ontario’s strict building codes and Tarion’s standards.
Why is it mandatory?
When you purchase a new home, you expect it to be free of defects and built to high standards. Unfortunately, even the best builders can make mistakes, and unforeseen problems can arise. The Tarion Warranty lets you hold builders accountable, giving you peace of mind by protecting you from bearing costly repairs on your own.
What Does the Warranty Cover?
Tarion Warranty protects you even when the property is under construction. They include:
Deposit Protection
This rarely happens, but if the builder fails to complete the project or breaches the purchase agreement, you can get most of your deposit back. Here’s how the coverage works:
- For freehold homes, deposits are protected based on the purchase price:
- Homes priced $600,000 or less: Covered up to $60,000.
- Homes priced over $600,000: Covered up to 10% of the purchase price, with a maximum of $100,000.
- For condos, your deposit is protected for up to $20,000 if the builder fails to place the deposit in a trust account.
Delays in Closing
Delays are a frequent challenge in Canada’s pre-construction industry. The Tarion Warranty ensures you’re protected by holding builders accountable and providing compensation if they fail to meet the agreed-upon timelines.You will either be provided temporary accommodations or monetary compensation.
Once you move in, Tarion Warranty extends over several years, divided into three distinct phases, each of which address specific issues. It covers all kinds of properties in Ontario, whether freehold, contract, or condo units. They include:
Year One: Workmanship and Materials
Year one covers defects in workmanship and materials including common but significant problems like poorly installed flooring, drafty windows, or malfunctioning doors. It also guarantees that the home meets the standards outlined in the Ontario Building Code.
Years Two and Three: Major Systems and Water Protection
During this phase, the warranty focuses on critical systems and water protection. This includes plumbing, electrical, and heating systems, as well as any water penetration through foundations, walls, or roofs.
Years Four to Seven: Structural Integrity
In the final phase, it covers major structural defects that compromise the safety or usability of your home. Some examples include issues with the foundation, load-bearing walls, or roof framing that usually rise a few years after living at your new home. Coverage includes the cost of repairing or replacing the defective component, with a maximum limit of $300,000.
Before Taking Possession…..
Your builder will prepare a Pre-Delivery Inspection document after a final walk-through. It details any items that are damaged, missing, incomplete, or not working properly, which then will be corrected promptly.
Make sure you are present at this inspection because your builder’s representation will explain how to operate and maintain key systems in your home, such as ventilation, plumbing, and heating. If your builder doesn’t resolve the issues noted on the PDI Form, you can escalate them to Tarion for assistance.
Are a condo’s common elements protected too?
Yes, that’s right. The warranty applies to your building’s shared spaces, including lobbies, hallways, elevators, gyms, barbeque areas, and any other amenities provided. It’s to make sure the condo building remains safe and functional for all residents. Builders must provide a “Performance Audit Tracking Summary” that outlines any issues identified in the common elements and repair them promptly. A cumulative coverage of up to $2.5 million is applicable here.
Coverage Limits for Properties Before and After February 1, 2021
Coverage limits underwent limit changes on February 1, 2021. Here’s a breakdown of the differences:
Homes Purchased Before February 1, 2021
- Total coverage limit for a freehold home or a condominium unit is $300,000
- Deposit protection for freehold homes is capped at $40,000, while for condominiums, it is limited to $20,000
- Additional protections for certain warranted items, such as major structural defects, fall within the overall $300,000 cap
- Limit for common elements in condominiums is $50,000 multiplied by the number of units in the building, up to a maximum of $2.5 million
Homes Purchased On or After February 1, 2021
- The total coverage limit increased to $400,000 for freehold homes and condominium units
- Deposit protection for freehold homes now aligns with the purchase price:
- Homes priced $600,000 or less are protected up to $60,000
- Homes priced above $600,000 are protected up to 10% of the purchase price, with a maximum of $100,000
- For condominiums, deposit protection remains at $20,000 unless specified otherwise
- Limit for common elements increased to $100,000 multiplied by the number of units in the building, with a maximum of $3.5 million
How to make a Tarion claim?
Claiming your warranty is pretty straightforward even though the process includes multiple steps. Here’s how to make a claim:
Step 1: Notify Your Builder
Builders are responsible for addressing warranty claims directly, so notify them in writing. Provide them with clear details about the issue and allow access to your home for inspection and necessary repairs. Attach photos and videos to your email with detailed description, so the process can move ahead quickly.
Step 2: Register and Use the MyHome Online Portal
Tarion’s MyHome portal is intuitive to use, so make sure to register as soon as you take possession of your home. Use the portal to submit warranty claims to both your builder and Tarion. You’ll also be alerted about warranty deadlines and also makes it easier to request assistance from Tarion if your builder doesn’t resolve the issue.
Step 3: Follow Up with Your Builder
Depending on the severity of the issue, give your builder one to four weeks to respond. Keep detailed records of all communications, including emails, calls, and repair appointments. If there’s a delay from the builder, follow up a couple times, and document these interactions as well.
Step 4: Involve Tarion if Needed
If your builder fails to resolve the problem or disputes its warranty eligibility, contact Tarion. Use the MyHome portal to escalate your claim and provide supporting evidence, such as photos, videos, and a record of communications with your builder. Tarion will assess the issue and take steps to ensure warrantable items are addressed.
Step 5: Stay Within Warranty Timelines
To qualify for Tarion’s assistance, you must report your claim within the specified warranty periods:
- Submit a 30-Day Form for issues identified during your first month in the home
- File a Year-End Form within 30 days of your first year’s anniversary
- Use the Second-Year and Major Structural Defects Forms for issues that fall under their respective coverage periods
You can’t make a claim if you miss these deadlines.
Step 6: Explore Alternative Dispute Resolution Methods
If you cannot resolve your claim through Tarion or directly with your builder, consider alternative options like civil court, small claims court, or private arbitration and mediation. This happens rarely and should only be used as a last resort.
Step 7: Monitor Repairs and Follow Up
Once repairs are completed, verify that the work addresses the issue fully. If a problem still persists or new issues arise, restart the process by notifying your builder and keeping detailed records.
What is not covered by Tarion Warranty?
Ultimately, as a homeowner you are needed to take good care of your home. There’s a long list of items that’s not covered by this warranty. They include:
- Normal Wear and Tear: Everyday issues like scratches on floors, fading paint, or minor dings are not covered.
- Homeowner Negligence: Damage caused by improper maintenance or misuse, such as neglecting HVAC upkeep, falls outside the warranty.
- Landscaping Problems: Grass, shrubs, trees, and exterior features like driveways, walkways, and fences are excluded.
- Custom Features or Upgrades: Defects in luxury finishes or special designs beyond basic Ontario Building Code compliance aren’t included.
- External Factors: Damage from severe weather, natural disasters, or pests must be handled through home insurance.
- Appliances and Fixtures: Items like refrigerators, stoves, or washers provided by third parties are not under Tarion’s coverage, but they may have manufacturer warranties.
If you’d like to learn more about other pre-construction safeguards, read our blog here.