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If you’re thinking about buying a new-build home, you might be feeling a little concerned about putting down a big deposit on a home that doesn’t exist yet, and what happens to your money if for some reason your deal doesn’t close.

Buying pre-construction is never without risk and challenges can arise in even the best situations. However, in Ontario new homes come with deposit protection and the more you understand about what’s covered, the more confident you can be in making your purchase. 

In this article we’d like to tell you about a new way to protect yourself and provide answers to some of the most common questions new home buyers have.

New! Register your purchase agreement with Tarion

There’s a new level of protection you can take advantage of when you purchase a pre-construction home, and that is to register your purchase agreement with Tarion. 

This quick and easy step will create a record of the purchase and allow Tarion to provide you with key information on the builder’s warranty and coverage – like deposit protection – before you get the keys to your new home. 

Once a purchase agreement is registered, Tarion will be able to cross-reference the information and confirm that the builder is approved to build and sell new homes. In the event that they are not, Tarion can provide you with immediate assistance. 

What is deposit protection?

Deposit protection covers you in cases where your builder goes bankrupt or fundamentally breaches your agreement. While the first situation is pretty straightforward, the second one can be a lot trickier. If you think your builder has broken the terms of your agreement, you should seek the advice of a qualified lawyer.

Deposit protection also applies in situations where you exercise a statutory right to end the purchase agreement. One example of this is when your builder delays your home’s completion beyond the latest allowable date indicated in the Addendum of your agreement.

How much of my deposit is covered?

The level of deposit protection depends on the purchase price and type of home you buy. If the price of your new freehold home is $600,000 or less, your deposit is covered for up to $60,000. For example, if the price of the home you’re buying is $550,000 and you put down $60,000, your entire deposit is protected. If the purchase price is over $600,000, your deposit is protected for 10 per cent of the purchase price, up to a maximum of $100,000.

If you’re looking to buy a condo unit, you receive two levels of deposit protection. First, your deposit is protected by the trust provisions of the Condominium Act. Under the Act, your builder must hold your deposit money in a trust account. As a second level of protection, if for some reason your deposit was not placed in trust, the new home warranty provides protection for up to $20,000. 

What about other payments I make upfront?

Deposit protection covers other payments related to your new home within the above limits, such as those you make for upgrades and extras like hardwood flooring or granite counters. 

However, keep in mind that the new home warranty does not protect any payments made to reserve or hold a home – sometimes called “reservation agreements” – before you sign the purchase agreement.   

How do I get my deposit back?

If your builder cancels or fundamentally breaches your agreement, your builder is obligated to return your deposit to you. 

If your deposit is not refunded by the builder, you can submit a deposit protection claim to Tarion. For details about how to submit your deposit claim to Tarion, visit the Coverage & claims before you move in page on our website.

We hope this information has been helpful. If you’re in the process of buying a new home and want to register your purchase agreement with Tarion, go to