Tarion Warranty – Just What Does It Cover?

What is a Tarion Warranty? tarion

Purchasers of real estate from a builder, whether it be a home or a condominium, are often confused about the warranty protection programs available on their newly built units.  

Tarion is a non-profit, private corporation established in 1976 to protect the rights of new home buyers and regulate new home vendors and builders according to the terms of the Ontario New Home Warranties Plan Act (the “Act”). Not only does the Act require builders in Ontario to provide new home warranty coverage, but they must also be registered with Tarion and enrol every new home prior to the start of construction. Tarion is also responsible for managing a guarantee fund to ensure that builders honour the statutory warranties, and for enforcing the overall terms of the Act. For more information Click Here.   

Who is covered under a Tarion Warranty?

Homes, this could be a detached home, a townhome, a row-home or a unit in a quadruplex are covered.  Residential dwelling units in a standard condominium project or a dwelling built on a vacant land condominium unit will have coverage if they meet the “new home requirements.” For more information about which homes are covered, or to determine whether your new home will be covered under the Tarion Warranty, Click Here

When does the coverage start?

The clock starts ticking when the home is “completed for possession”.  What this means is that for a home, coverage usually starts when the deal is closed and you own the home.  For condominiums, coverage begins at the date of occupancy.  If you are unsure about when your warranty started, ask Tarion to confirm their position before any warranty claiming periods expire.

What does a Tarion Warranty Cover?

Deposit Protection:

In the event that your builder goes bankrupt or breaches the terms of the purchase agreement, Tarion will protect your deposits to a maximum of $20,000. Deposits paid for all other new homes are protected to a maximum of $40,000.

However, any funds given to hold a condominium unit before you have an official signed purchase agreement are not protected under the warranty.

Delayed Closing or Occupancy:

Under the delayed closing and delayed occupancy warranty, your builder guarantees that your home will be ready for you to move in either by a date specified in the purchase agreement or by a date that has been properly extended if circumstances occur that delay the home’s completion. In many cases, your builder will be required to compensate you if a delay occurs. Be sure to read the Tarion Warranty Critical Dates that are included in the Agreement of Purchase and Sale. 

Unauthorized Substitution

This protects the purchaser from a builder unscrupulously substituting items specified in the purchase agreement. For example, if a particular back-splash color or material was agreed to, substitution without your written authorization is not allowed. This also extends to the inclusion of specifics (think stainless steel appliance by a notable brand, shutters or blinds of a particular suasion etc.). Your recourse as a purchaser is to demand that the original items specified be included or that cash compensation be given. In practice, your Agreement of Purchase and Sale will often include a clause allowing the builder to provide you a close match, or the next best substitute, often deemed by availability.

Common Elements

For most condominium projects, warranty coverage also includes the shared areas of the building, referred to as Common Elements.   

How long am I covered?

One Year Warranty

  • Requires a home is constructed in a workman-like manner and free from defects in material;
  • Protects against unauthorized substitutions.   
  • Requires the home to be fit for habitation;
  • Protects against Ontario Building Code violations; and
  • Applies for one year, beginning on the home’s date of possession even if the home is sold.

Two Year Warranty

  • Protects against water penetration through the basement or foundation walls;
  • Protects against defects in materials that affect windows, doors and caulking and defects in work that results in water penetration   into the building envelope;
  • Covers defects in work or materials in the electrical, plumbing and heating delivery and distribution systems;
  • Covers defects in work or materials that result in the detachment, displacement or deterioration of exterior cladding (such as   brickwork, aluminum or vinyl siding);
  • Protects against violations of the Ontario Building Code that affect health and safety; and
  • Applies for two years, beginning on the home’s date of possession.

Seven Year Warranty

Your home’s seven year warranty covers major structural defects (MSD) and begins on the date you take possession of the home and ends on the day before the seventh anniversary of that date.

For example, if your home’s date of possession is January 1, 2005, the seven year MSD warranty begins on January 1, 2005 and remains in effect until and including January 1, 2012.

A major structural defect is defined in the The Ontario New Home Warranties Plan Act  as:

In respect of a post June 30, 2012 home, any defect in work or materials in respect of a building, including a crack, distortion or displacement of a structural load-bearing element of the building, if it,

  1.  results in failure of a structural load-bearing element of the building,
  2. materially and adversely affects the ability of a structural load-bearing element of the building  to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element, or
  3.  materially and adversely affects the use of a significant portion of the building for usual and ordinary purposes of a residential dwelling and having regard to any specific use provisions set out in the purchase agreement for the home

The seven year MSD warranty includes significant damage due to soil movement*, major cracks in basement walls, collapse or serious distortion of joints or roof structure and chemical failure of materials.

In addition to the general exclusions, the seven year MSD warranty specifically excludes: dampness not arising from failure of a load-bearing portion of the building; damage to drains or services; and damage to finishes.

What is Not Covered By Tarion?

Normal Wear and Tear

  • Normal shrinkage of materials that dry out after construction such as nail “pops” or minor concrete cracking
  • Settling of soil around the house or along utility lines (other than subsidence beneath the footings of the home)
  • Scuffs and scratches to floor or wall surfaces caused by moving, decorating or day-to-day use of the home by the homeowner

Damage Caused by Improper Maintenance

  • Dampness or condensation caused by failure to maintain proper ventilation
  • Damage resulting from improper maintenance

Damage Caused by a Third Party

  • Damage caused by municipal services or utilities
  • Damage caused by floods, “acts of God”, acts of civil or military authorities or acts of war, riot, insurrection, civil commotion or vandalism
  • Damage caused by insects or rodents, unless it is the result of construction that does not meet the Ontario Building Code

Secondary Damage Caused by Defects that are Under Warranty

  • Personal or property damage, such as personal injury, loss of income and other secondary loss associated with warranted defects or repairs

(However, your homeowner insurance may cover such secondary or consequential damage.)

Supplementary Warranties

  • Warranties or agreements provided by your builder over and above the statutory warranties.  Such matters are between the builder and the homeowner and are not enforced by Tarion

Deficiencies Caused by Homeowner Actions

  • Alterations, deletions or additions to the home that were made by the homeowner
  • Changes by the homeowner to the direction of the grading or the slope of the ground
  • Defects in materials, design or work that was supplied or installed by the homeowner

Elevators

  • The seven year MSD warranty does not extend to elevating devices

HVAC Appliances

  • The seven year MSD warranty does not extend to appliances that form part of the heating or cooling apparatus, equipment or systems, whether for water, air or other substances, including furnaces, air conditioners, chillers and heat recovery ventilators

Specific Defects Accepted in Writing

  • Ascertained defects in work or material accepted in writing by the homeowner

 There is a lot to cover, and this has only  scratched the surface.

If you need more information about Tarion, Click Here. 

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