How Am I Protected? A Homeowner’s Guide to Tarion
When you buy a home in Ontario, you are protected by a law called the New Home Warranties Plan Act which lays out the obligations of the homebuilder in delivering your new home. The act is enforced by a body known as Tarion, and when there is an issue or dispute, Tarion is responsible for ensuring homeowners are compensated accordingly.
But many new homeowners may not be aware of what is included in the act — what kinds of damages, faults or failures they are protected against — or how much they may be entitled to.
That’s why we’ve included a brief explanation of your coverage under Tarion below.
Before You Move In
There are a few things that can potentially go wrong between when you sign the purchase agreement and when you move into your home. The development may get cancelled or the delivery of your home may be delayed. There are several categories of coverage which you can read about in full on Tarion’s website, but these are the key ones.
- Deposit protection: If your builder goes bankrupt, or they’ve otherwise breached the terms of your purchase agreement, you’d be entitled to receive at least a portion of your deposit back. If the builder does not — or cannot — return your deposit, Tarion covers you for 10% of the price of your home, up to a maximum claim of $100,000.
- Delayed Closing & Occupancy: When you sign your purchase agreement, there are typically one of two types of dates that may be indicated for closing: one is a Firm Closing Date and the other is a Tentative Closing Date. This distinction is important because the builder cannot extend a firm closing date without compensating affected homeowners (up to a maximum of $7,500). A builder may, however, extend a tentative closing date up to two times for a maximum of 120 days each without compensating you. However, these provisions don’t apply to events outside of the builder’s control (acts of God, for example) provided that they notify you right away. You can read more here.
After You Move In
Just before you move in, Tarion will send a professional to conduct a PDI or Pre-Delivery Inspection. This is to ensure that all elements of your new home are in good working order (you can view the full checklist here).
Once that is complete and you move in, you do have coverage for up to seven years. But the coverage varies from year to year.
In the first year, you’re protected against…
- Any defects in the materials used to construct your home
- Anything that may violate Ontario’s Building Code
- Any unauthorized substitutions made by the builder
In year two, you’re protected against…
- Water penetration through the basement or foundation walls
- Defects in work or materials that result in water damage, or detachment/displacement/deterioration of the exterior cladding (i.e. brick or siding)
- Defects in the electrical, heating and plumbing systems
- Any Ontario Building Code violations that may affect your health and safety
For up to seven years, you’re covered for major structural defects including…
- Soil movement and major cracks in basement walls
- Chemical failures of materials and environmental hazards, for example excessive radon levels
- Collapse or serious distortion of joints or of the roof structure
There are also a number of defects that Tarion does not cover, which includes anything resulting from modifications that the homeowner may have made, damages caused by unforeseeable Act of God (ex. fire, flood, extreme wind, etc.), secondary damage caused by something under warranty (ex. personal injury), and ordinary wear and tear.
At Sunny Communities, your peace of mind is our priority which is why we believe it’s important for you to understand your coverage. Visit Tarion’s website for more information, and explore our current and upcoming communities.