If you have bought or have been considering buying a new construction from a builder, you most likely will have heard of Tarion.
Tarion is a non-profit private corporation that the government has empowered to enforce the Ontario New Home Warranties Plan Act and Regulations. Tarion protects consumers of new homes related to the quality of construction. It also regulates and educates builders. Tarion Warranty Protection is mandatory for all new home builds in Ontario.
Many clients ask if Tarion is new for new home builds. In fact, the New Home Warranty Program has been operational since the 1970s. In recent years, through marketing, rebranding and expanded education for homeowners and builders, Tarion has gained visibility among home buyers and non-home buyers alike.
The Warranty Program came into effect in the 1970s. Housing and Urban Development Canada (HUDAC) and Central Mortgage and Housing Corporation (CMHC) started researching the possibility of a warranty program to protect consumers of new home builds after seeing the successes of a similar program in Great Britain. In April 1976, the Ontario Council of HUDAC established a voluntary warranty program under the Ontario New Home Warranties Plan Act. Registration and enrollment in the program became mandatory in Ontario in January 1977.
The 1980s were a difficult time for builders because of an economic downturn. Despite the recession and a name change (the HUDAC New Home Warranty Program changed its name to the Ontario New Home Warranty Program), Tarion expanded its services to include delayed closing coverage for freehold homes.
By 1998, research showed that both builders and homeowners were unsatisfied with the Warranty Program. The most common complaints were long wait times, unfairness, and uncertainty in the warranty program.
In the 2000s, homeowners were becoming more demanding about the quality of the workmanship in their home and the after-closing customer service provided by the builder. In response, the program launched a set of Construction Performance Guidelines and Minimum Customer Service Standards to create timelines for builders to repair new constructions. In 2003, the program required builders to provide a homeowner information package for every new home sold. This package provides homeowners with information on the warranty, the process, coverage and timelines.
Finally, in 2004, in a final step to remarket itself and acknowledge the changes within the corporation regarding better education and service standards for clients, the Corporation changes its name to Tarion, the name by which it is known today. Tarion works for homeowners and builders in four key areas:
1) Through education for homeowners about the program and for builders on Building Code Standards and Customer Service Standards.
2) By warranty enforcement, Tarion provides dispute resolution options for builders and homeowners.
3) Tarion regulates the licensing of all new home builders in Ontario and ensures they all meet the standards for customer service and expertise in their field, and have the financial capabilities to take on a project.
4) Tarion investigates and prosecutes illegal home builders. Builders who are not registered with Tarion or who do not enroll a new construction with the program may be fined up to $100,000.
A brief outline of your warranty is as follows:
Deposit protection and delayed closing compensation;
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 October 23, 2005, the seven year MSD warranty begins on October 23, 2005 and remains in effect until and including October 22, 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,
(i) results in failure of a structural load-bearing element of the building,
(ii) 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
(iii) 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.
For most condominium projects, warranty coverage also includes the shared areas of the building, referred to as Common Elements.
*Soil movement means subsidence, expansion or lateral movement of the soil not caused by flood, earthquake, “acts of God” or any other cause beyond the reasonable control of the builder.
Tarion assists homeowners and builders in a variety of ways and is mandatory for all new home freehold and condominium construction. Tarion is not available for owner-built new constructions, a small percentage of new constructions. If you would like more information about Tarion and the Warranty Program, see their website at www.tarion.com