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Whether you own a new home or condo, are considering buying one, or just love to dream about it, the Open Door blog is here to share stories that can help you protect what is likely the biggest investment of your life.

The Open Door blog is published by Tarion, a non-profit corporation that administers Ontario’s New Home Warranty Plan and registers all new home builders in Ontario. Click here to learn more about us.

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Urban or rural, your new home comes with a builder’s warranty
May 5, 2022
Rocking chairs on a covered porch


Small towns in more rural areas of Ontario are growing quickly these days, as some families choose to leave denser urban areas for a quieter lifestyle. The pandemic has been somewhat of a catalyst for this exodus, since remote work has proven to be a successful business strategy.

So, if you’re one of those “remote” workers looking for a new-built home where life is a little less hectic, there is good news. 

First, you have a lot of choice. Small towns outside of large urban centres are seeing lots of new homes under construction. And second, there’s an extremely good chance your home will come with a mandatory warranty provided by your builder and backed by Tarion.

Here’s a quick breakdown of how you’re covered: 

Your deposit is protected 

When you sign that cheque for a deposit on a new freehold home or a condominium unit anywhere in Ontario, that investment is protected in the event the sales transaction does not close. 

For freehold homes – where you fully own the house and the lot it’s built on – your deposit coverage depends on the home’s selling price. If it is selling for $600,000 or less, you’re protected for up to $60,000; if it’s selling for over $600,000, you’re protected for 10 per cent of your deposit to a maximum of $100,000. 

Condominium unit deposit coverage works a little differently. According to provisions in the Condominium Act, your deposit must be placed in trust, meaning it is fully protected. Plus, you have a further $20,000 in protection under the new home warranty plan. 

You can be compensated for delays 

Both you and your builder hope that nothing happens to cause a delay in your closing date.  

Yet, sometimes delays happen for a legitimate reason and, depending on the terms of your purchase agreement, your builder may be allowed to extend your closing or occupancy date – provided they follow the right procedures. If they don’t, you may be entitled to delay compensation.

Compensation under the warranty is $150 per day to a maximum of $7,500. This money is intended to cover additional living expenses and other costs you incur as a result of the delay. For example, if you need to temporarily rent a place, or put your possessions in storage, you could make a claim for delay compensation to help cover your costs.  

You have a warranty against defects for up to seven years 

This warranty starts on the day you take possession of your new home or occupancy of your new condominium. It is divided into three coverage periods.  

In the first year, you’re protected against defects in workmanship or materials throughout the home, including violations of the Ontario Building Code (OBC) and unauthorized substitutions of items your builder agreed to provide. For example, if your bathroom vents to the attic, that’s an OBC violation. If you wanted granite countertops but the builder installed laminate instead without your approval, that is an unauthorized substitution. In both cases, you could file a warranty claim with the builder.

Your two-year warranty covers your home’s major systems – plumbing, heating, air and electrical systems – as well OBC violations affecting health and safety, cladding defects, and water penetration through the basement foundation or other parts of the home.

The final coverage is protection against major structural defects for up to seven years. A major structural defect is something that seriously threatens the structural integrity of a home or affects the use of a significant portion of it. Examples may include a shifting of your home’s foundation, major cracks in basement walls, or toxic mould that renders the home uninhabitable.

No matter where you live – urban or rural – your warranty provides you with important coverage. You can find more information about your warranty coverage at www.tarion.com.


The goal of this blog is to provide you with general information about the warranty process by sharing real experiences from new homeowners. The blog should not be relied upon as legal advice. For privacy reasons, we will not address or resolve current cases in a public forum, so any comments or questions that are posted on this site that describe individual cases cannot be discussed. If you have a question about your warranty or Tarion generally, we would be pleased to discuss your issue, in the context of your particular circumstances and in confidence. We exercise reasonable care to avoid offensive, illegal or defamatory content from being posted, as well as comments that are intended solely for self-promotion or considered to be spam.

 

  

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