Entitlement to Compensation
If you have given your builder an opportunity to resolve the items assessed as warranted in the Conciliation Assessment Report and Tarion determines that a warranted item has not been resolved by your builder, then Tarion will pay you compensation for the item so that you may arrange to have the necessary repairs completed.
If you have not given your builder a reasonable opportunity to resolve the warranted items, then you may have disentitled yourself to warranty compensation from Tarion.
Compensation Limits
The Ontario New Home Warranties Plan Act limits the maximum amount payable from the Guarantee Fund for a home. It also sets liability limits for certain claim types (e.g., radon, mould, sewage disposal system). Information about compensation limits can be found here.
Compensation Amount
The compensation paid by Tarion is the amount you may be required to pay if you hire a contractor to repair the warranted item (subject to the compensation limits).
Tarion will determine the scope of work (labour and materials) required to resolve the warranted item. Tarion will then prepare an internal quote or obtain a quote from an external contractor to determine the cost to complete the scope of work. The compensation amount will be based on a quote or average of quotes prepared or obtained by Tarion. It may also be based on a quote provided by you or your builder if the scope of work is the same as a quote obtained or prepared by Tarion. The quote(s) used to determine the compensation amount will be provided to you.
A quote may include an amount for project management fees where the nature of the repair work requires the coordination of multiple trades or is otherwise very complex. A quote may also include an amount for profit and overhead. The contractor preparing the quote will determine whether they will charge project management fees and/or profit and overhead to complete the scope of work. Tarion will include project management fees and/or profit and overhead in the compensation amount only if an amount for project management fees and/or profit and overhead is in the quote(s) on which the compensation amount is based. No additional amount for project management fees or profit and overhead will be paid by Tarion beyond what is in the quote(s) prepared for the required scope of work.
Compensation Payment
Once Tarion has determined the amount of compensation you are entitled to for the warranted item, Tarion will mail you a cheque for the compensation amount. If you accept the compensation payment, you will still be able to appeal or dispute the amount should you wish to do so.
Disputing the Compensation Amount
If you disagree with the compensation amount determined by Tarion, you may wish to consider the following options to resolve your claim:
You can request a decision letter that will enable you to appeal the compensation amount to the Licence Appeal Tribunal (LAT). Once you receive the decision letter, you will have 30 days to submit your appeal to LAT. LAT is an independent adjudicative agency created by the Ontario government. You can learn more about LAT by visiting their website here.
You can request that the claim be referred to a Tarion Dispute Resolution Specialist. The Dispute Resolution Specialist will review the compensation amount and consider what options other than LAT may be appropriate to resolve your concerns. This may include, for example, taking additional steps in the claims process or offering you a mediation with a third-party mediator. Requesting a review by a Dispute Resolution Specialist does not affect your LAT appeal rights and, if your concerns are not resolved, a decision letter can be issued.
You can challenge Tarion’s compensation determination in civil court (including Small Claims Court, depending on the amount of your claim). For this option, it is recommended that you seek legal advice.
Cashing the compensation cheque does not prevent you from appealing the compensation amount at LAT, requesting a review by a Dispute Resolution Specialist, or pursuing any other legal avenues open to you
Concern Identified During Repair
Tarion will not include in the compensation payment any contingency amount to cover unexpected or additional costs that may arise when repairing a warranted item.
If during the repair you identify a concern, you may contact Tarion so that we can assess the newly identified condition and determine whether you are entitled to additional compensation for the warranted item.
You may be entitled to additional compensation only if the newly identified concern directly relates to the warranted item. For example, if the compensation Tarion paid was based on a scope of work that proved to be incorrect or inadequate to fully repair the warranted defect, then we will pay additional compensation to cover the full repair (subject to the compensation limits).
You will not be entitled to additional compensation if the newly identified concern does not relate to the warranted item. For example, if your contractor found an electrical problem while fixing a drywall issue, the electrical problem is a new item and will only be assessed for coverage under the builder’s warranty if you submit a new claim for that item.
Other Payments
Harmonized Sales Tax (HST)
Tarion will not include an amount for HST in the compensation payment, but Tarion will reimburse you for HST you were required to pay on the compensation amount to repair the warranted item.
A claim for HST reimbursement must be made to Tarion within one year of receiving the compensation payment for the warranted item. To make a claim for HST reimbursement, you must send Tarion a copy of the invoice for the completed work bearing the invoicer’s HST registration number and proof that the invoice has been paid.
Quote and Expert Report Costs
If you submit a report from a consultant or contractor that Tarion relies on to determine that an item is warranted, Tarion may reimburse you for the cost of the report. Similarly, if you submit a third-party quote that Tarion uses to determine the compensation amount to resolve a warranted item, Tarion may reimburse you for the cost of obtaining the quote.
To be reimbursed, you must provide Tarion with the invoice that you received from the consultant or contractor and proof that the invoice has been paid. The reimbursement will be subject to Tarion’s assessment of what a fair and reasonable cost for the report is, having regard for the matter at issue and relevant industry practice.
Legal Fees
Tarion will not reimburse your legal fees as part of a compensation claim. Legal fees are a secondary financial loss and are not covered by the builder’s warranty under the Ontario New Home Warranties Plan Act. Reimbursement of legal fees or similar costs in other dispute resolution forums, such as civil litigation or appeals to the Licence Appeal Tribunal, will be determined according to the rules of the applicable forum.