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    Homeowner Information Package

Contract Homes

​In general terms, a “contract home” is a home that is built on land (a vacant lot, for example) that is already owned by the prospective homeowner.

The home is constructed in accordance with a construction contract between the homeowner and a builder, and the builder (contractor) undertakes the performance of all of the work and the supply of all materials necessary to construct the completed home.

Supporting image of houseIf a homeowner, rather than a builder (contractor), exercises significant control over the construction of a new home, or is responsible for contributing one or more essential element(s) to it, the home may no longer be characterized as a contract home, but rather it becomes an “owner-built home”. This is important because a contract home is entitled to statutory warranty coverage (except for Delayed Closing Coverage) but an owner-built home is not.

As an owner, the important thing to remember is that the statutory warranty is intended for homes where a builder does the work. It is not meant to protect a landowner who is building a home, or for situations where separate contractors are building different stages of a home.

If you are building a contract home, it is recommended that you visit the Tarion website for information. You should also consult a lawyer to assist you with the construction contract and explain your rights and obligations.

Financial Loss for Contract Homes

If you have entered into a contract with a builder to construct a freehold home on land that you own, the money that you pay to the builder under the construction contract will be protected up to $40,000. In the event that the builder fails to substantially perform the contract, Tarion will pay the difference between the value of the work and materials supplied by the builder and the amount you paid the builder, up to an aggregate total of $40,000.

To make a claim for a financial loss on a contract home, please contact us at 1-877-9TARION (1-877-982-7466).