Under the new home warranty, purchasers of new homes (not including contract homes) are entitled to statutory deposit protection if:
- the builder goes bankrupt resulting in the transaction not closing;
- the builder fundamentally breaches the purchase agreement resulting in the transaction not closing; or,
- the purchaser exercises a statutory right to rescind the purchase agreement before closing.
As of January 2018, deposit protection includes other payments made by the purchaser, such as those made for upgrades and extras.
Deposit protection does not apply to any payments made to reserve or hold a home or a condominium unit before the purchase agreement is signed.
Deposit protection for freehold homes
For purchase agreements signed between February 1, 2003 and January 1, 2018, deposits are protected up to a maximum of $40,000.
For purchase agreements signed on or after January 1, 2018, deposit coverage depends on the purchase price of the home:
- If the price of the home is $600,000 or less, the purchaser’s deposit is protected for up to $60,000.
- If the price of the home exceeds $600,000, deposit protection equals 10% of the purchase price up to a maximum of $100,000.
Deposit protection for condominium units
Condominium unit deposits must be placed in trust under the provisions of the Condominium Act. If you terminate a purchase agreement, you must return the purchaser’s deposit in full within 10 days. Tarion provides deposit protection of up to $20,000 plus a limited amount of interest that has accrued.
Deposit refund claims
If you fail to refund a deposit to a purchaser, the purchaser may make a deposit refund claim to Tarion. Tarion will provide you with copy of the documentation submitted by the purchaser and give you an opportunity to respond.