Why the New Home Warranty Never Covered Thao's Renovation

The situation

Thao and Micheline ran a small trades business out of a converted warehouse in Windsor, splitting the work between plumbing calls he handled and electrical jobs she took on, with two employees between them. After several years of steady growth, they decided to add a second bay to the building so they could store more equipment and stop renting an off-site unit. They hired a general contractor, Genevieve, who had done similar commercial additions before, and signed a contract for roughly $210,000 to build out the new bay: foundation, structural steel, roofing, and a connecting wall tying it into the existing building.

The work took about five months, ran over the original schedule, and by the time it was substantially finished Thao and Micheline had paid out nearly the full contract price in progress payments, holding back only a small final installment as their contract required. They moved equipment into the new bay that winter. Within a few months, water was coming through the roof seam where the addition met the original structure, and a section of the interior wall had started to show cracking that a structural engineer later linked to a settling issue in the new foundation.

What the review found

Thao's first assumption was that this was exactly the kind of thing a new home warranty was built to catch. He had heard of the warranty program that protects buyers of newly built homes in Ontario, and figured an addition built from the ground up by a licensed contractor would fall under something similar. It does not work that way, and the gap caught him off guard.

Ontario's new home warranty program applies to new homes and condominiums built by licensed builders and sold to purchasers, and it is tied to that sale relationship. It does not extend to renovations, additions, or commercial construction, even when the work is substantial and even when the contractor doing it also builds homes elsewhere. Thao and Micheline's building was an existing commercial structure, their contract was a renovation and addition contract rather than a new home purchase agreement, and no part of the arrangement had ever triggered warranty coverage. There had never been a warranty to lose; there had simply never been one in the first place.

That left the couple with what they had signed: a construction contract, an engineer's report pointing to inadequate foundation preparation and a poorly flashed roof transition, and a contractor who, when confronted, argued the water intrusion was a maintenance issue and the wall cracking was pre-existing settling in the old building rather than anything caused by her crew's work.

It was an uncomfortable realization for Thao, who spent his days doing exactly the kind of trades work that depends on things being installed to code the first time. He understood the mechanics of a roof flashing detail better than most homeowners would, which made it harder to accept that a licensed contractor had gotten the transition wrong on his own building. Micheline's read was more practical: whatever the cause, the business now had two problems — a physical repair it could not put off, and a contractor unwilling to pay for it voluntarily.

What we did

1. Mapped the actual legal route, since warranty coverage was off the table. With no new home warranty to call on, the available remedy sat in construction law and general contract law: a claim for breach of contract and negligent construction, supported by the engineer's findings, and the protections available under the Construction Act for unpaid or disputed amounts on a construction project.
2. Confirmed the holdback had been retained correctly. Ontario's Construction Act requires owners to hold back a percentage of what they owe a contractor until well after the work is substantially finished, precisely so there is a fund available if deficiencies surface. Thao and Micheline had held back their required amount rather than paying the contract in full, which meant there was money on their side of the ledger to work with rather than a debt they would need to chase entirely from scratch.
3. Commissioned a second, independent engineering opinion. Genevieve's position depended on the damage being pre-existing or caused by the couple's own maintenance. A second engineer examined the roof transition detail and the foundation work directly, and concluded the flashing had been installed incorrectly at the seam and the new footing had not been prepared to the standard called for in the structural drawings — both defects in the new work, not the old building.
4. Sent formal notice of the deficiencies and a demand tied to the cost of repair. Rather than opening with a lawsuit, our team set out the engineering findings, the contract terms breached, and a repair estimate obtained from a separate contractor, giving Genevieve a documented opportunity to respond or negotiate before litigation began.
5. Filed a claim in the Superior Court when negotiation stalled. Genevieve's insurer disputed the second engineer's conclusions, and no repair offer materialized within a reasonable window. The claim sought the cost of repairing the roof seam and foundation issue, along with related losses, framed around the contract's specifications and the two engineering reports.
6. Used the holdback and the paper trail as leverage throughout. Because Thao and Micheline had never released the final holdback amount, Genevieve had a direct financial reason to resolve the matter rather than let it run to trial — and the contract, the progress payment records, and two consistent engineering opinions gave the claim a strong evidentiary footing from the outset.

The outcome

Facing two engineering reports that agreed with each other and a client with the discipline to have followed the holdback rules from day one, Genevieve's insurer moved to settle rather than proceed to trial. The final resolution covered the roof and foundation repairs in full, plus a portion of Thao and Micheline's related losses from having to close part of the new bay during the fix, landing in the mid range of what a $100,000 to $350,000 construction dispute of this kind typically produces once repair costs, engineering fees, and the disruption to the business were added together.

The couple's held-back final payment was applied against the settlement rather than paid out to Genevieve, and the remainder came through directly. The new bay reopened fully repaired roughly a year after the leak first appeared — a timeline that reflected the reality of construction litigation: engineering assessments, formal notice periods, and a court claim all take months to work through properly, even when the underlying facts are strong.

What made the case work was not a warranty that never existed. It was a contract that had been signed with clear specifications, a holdback that had been retained exactly as the law required, and physical evidence gathered early enough to survive a dispute over what actually caused the damage.

What you can learn from this