Originally published in the Toronto Sun on November 4, 2017.
Putting a deposit down on a newly built home or condo is an act of faith. You put your trust in the builder that they will create the home of your dreams. If they don’t, it’s good to know that your deposit is protected.
As new home prices in Ontario have risen so have the deposits required to secure a home.
That’s why it’s an opportune time to look at deposit protection for buyers of newly built homes that is more in sync with the current market, and Tarion is doing just that.
Under the Ontario New Home Warranties Plan Act, new home buyers of non-condominium freehold homes are currently offered a maximum of $40,000 in deposit protection.
We are proposing to increase coverage for non-condominium freehold homes from the current $40,000 to 10 per cent of the purchase price up to a maximum coverage of $100,000 with minimum coverage of $60,000.
So what does this mean?
By the terms of the Addendum attached to your purchase agreement, if your purchase is terminated through no fault of your own, your vendor must return all of your deposit. If the vendor does not or cannot repay you, you can make a claim to Tarion.
Under our proposal, if you have a valid deposit claim, Tarion will reimburse what you paid under your purchase agreement, with the following limits: if you paid $600,000 for your home or less, you are eligible to receive up to $60,000; if your home was more than $600,000, you are eligible to receive 10% of the purchase price, to a maximum of $100,000.
It’s important to note that deposit coverage for condos will remain the same for those purchasing a condo. Their full deposit is legally required to be placed in trust. If for some reason these funds are released improperly from the trust, Tarion will cover up to $20,000.
We’ve heard from buyers of newly built homes that this boost in deposit protection is sorely needed and I’m pleased to say that this new level of coverage is anticipated to be in place in January 2018.
As well, the Minister of Government and Consumer Services has introduced Bill 166, the Strengthening Protection for Ontario Consumers Act, 2017 which if passed, would extend deposit protection to include other payments such as those made for upgrades and extras.
If you’re interested in learning more about Tarion’s new deposit coverage, I encourage you to visit our proposal page and offer your comments.