Buying a New Build in Ontario: Tarion Warranty Basics

Buying a brand-new home or condo in Ontario is different from buying a resale. Instead of relying mainly on a home inspection, you also get a warranty backed by Tarion. It can cover problems that show up after you move in and some costs if closing is delayed.

The warranty only helps if you understand what it covers and when to file. This article walks through the three warranty periods, the claim form timeline, deposit protection and delay compensation, so you know what to track from the day you sign.

What the warranty covers

The Tarion warranty is layered. The one-year warranty starts on the date of possession, which for a condominium is the occupancy date. The two-year warranty covers items such as water penetration and heating and electrical systems. The seven-year warranty covers major structural defects and runs to the seventh anniversary of possession.

It helps to think of the layers as a timeline. The one-year warranty begins on possession, the two-year warranty covers items such as water penetration and heating and electrical systems, and the seven-year warranty covers major structural defects, so it runs for the longest period. The date that anchors the timeline is possession, or occupancy for a condominium, so record it carefully.

Which items fall into which layer, and what counts as a major structural defect, depends on the warranty rules and your specific home. Read the coverage details that come with your purchase and ask a lawyer if something is unclear.

Claim forms and deadlines

Claims are made on set forms, each with its own window, so put the dates in your calendar on possession day.

The written proof point is worth noting. Report problems to your builder in writing and keep copies, because that record is what the grace period depends on.

Because the Initial Form is automatically submitted on day 41, anything you want on it should be noted before then. The same applies to the Year-End Form, which is automatically submitted on day 365. Walking through your home early and again before those dates makes it easier to catch items in time.

Deposit protection before you move in

Tarion also protects deposits paid before closing. For freehold homes, the amount depends on when the agreement was signed. For agreements signed on or after January 1, 2018, protection is up to $60,000 for homes up to $600,000, and 10% of the price to a maximum of $100,000 above that. For agreements signed before 2018 the maximum is $40,000. For condominium units, deposit protection is up to $20,000.

Tarion has announced changes to how freehold deposit coverage works, including steps buyers may need to take shortly after signing. Confirm the current requirements for your agreement, and do it early.

Delayed closing and occupancy

New builds are often delayed. Tarion delay compensation is capped at $7,500 in total. It includes $150 per day for living expenses, with no receipts needed for those, plus receipted costs such as moving and storage. If the builder gives less than 10 days' notice of a delay, the buyer gets $1,500.

There is an important exception. Compensation is not payable when the delay comes from a mutual written agreement or an unavoidable delay, meaning extraordinary circumstances that are no fault of the builder or the purchaser. Builders often ask buyers to sign delay amendments, so read any such document carefully before you sign it.

• Keep every notice from the builder about a new closing or occupancy date, with the date you received it.
• Keep receipts for moving and storage, since those costs are receipted, while the $150 per day for living expenses needs no receipts.
• Keep a copy of anything you sign that changes the closing date, because a mutual written agreement to a delay means compensation is not payable.

What to do next

• Write down your possession or occupancy date and calculate the claim form dates from it.
• Keep a dated list of defects with photos and report them to your builder in writing.
• Keep proof of every deposit and every notice the builder sends about closing dates.
• Do not sign a delay amendment or waiver without understanding what compensation you may give up.
• Have a lawyer review your agreement of purchase and sale before you sign, and again before closing.

Frequently asked questions