As a real estate agent, when helping your clients buy a newly constructed – or even recently constructed home in Ontario – an important part of your service is making sure they know about the statutory warranty on most new homes that are less than seven years old.
This comprehensive warranty is provided by the builder and back-stopped by Tarion. It begins with deposit protection and delayed closing compensation and includes materials and workmanship protections for almost everything inside and outside the home in the first year, major systems for the first two years and major structural defects for up to seven years after taking possession.
It’s also important your clients know that all new home builders and vendors in Ontario must be registered with Tarion. This helps ensure that builders have the financial and technical competence to build homes and that the new home is properly enrolled in the warranty program.
In March, the Ontario government announced plans to renew the new home warranty program. One change is structural: the provider of the new home warranty program will be separated from the regulator of new home builders and vendors. The aim is to enhance consumer protection for new home buyers in the province.
The renewal of the Ontario’s new home warranty program will take some time to implement, so in the interim, Tarion is committed to seamlessly delivering on our daily responsibilities and operations and providing quality service to consumers.
This means that your clients who bought newly built homes should continue to submit warranty claims by following the current processes – new and ongoing warranty claims will continue to be resolved.
It also means that Tarion will continue working on several ongoing initiatives and improvements to the warranty program, including a review of deposit protection coverage for freehold homes and extending warranty protections to condominium conversions.
In 2015, changes were made to the Ontario New Home Warranties Plan Act that would extend most new home warranty coverage to buyers of units in a residential condominium conversion project. Tarion is working with the government on putting these protections in place, targeting January 2018 as a start date.
With respect to our review of deposit protection for freehold homes, this is a timely process since it was last changed in 2003. While the Condominium Act, 1998 requires that certain monies from condominium buyers be held in trust, deposits and upgrades paid by freehold purchasers are treated differently. Currently, freehold deposits are protected to a maximum of $40,000. Money paid for upgrades or extras is not considered a deposit and is therefore not usually protected.
Last year, Tarion publicly committed to reviewing deposit protection. The ministry also recently directed Tarion to introduce new deposit protection measures to better reflect today’s home prices and deposit requirements as a part of the government’s plan to renew the new home warranty program. We are now consulting with the public to improve these protections for home buyers. Some of the options include raising the amount of deposit protection and requiring builders to hold these deposits in trust, as they currently do for condominium purchasers. This discussion also involves protection for upgrades on freehold homes. Submissions to this consultation are open until June 23, 2017 and can be done at Tarion.com.
We are also continuing our highly successful illegal building prevention pilot with the Ontario Home Builders’ Association, the Ontario Building Officials Association and 15 participating municipalities. It is a result of the province’s 2014 budget commitment to work with the industry to combat illegal building.
If someone applies for a home-building permit in these municipalities and they are not registered with Tarion, they are directed to Tarion to obtain a letter that confirms that they are a bona fide owner-builder, so that the municipality can issue them a building permit. They are also provided with information explaining that by building their own home, they will not receive warranty coverage, the importance of working with a registered builder; the liabilities of filing the permit under their own name; and information about the warranty.
Our goal is to identify potential illegal building projects before they begin and to educate and protect consumers before illegal building occurs. Eventually, we hope to work with the provincial government to effect legislative change to implement this initiative across the province.
These initiatives, and others, will proceed while the government works through the changes that will eventually see a new structure for the delivery of new home warranties and builder regulation.
Tarion is committed to working with the government to renew Ontario’s new home warranty program. Our leadership, expertise and collaboration will be essential in supporting the smooth transition and delivery of the government’s plan.
In the meantime, rest assured that your clients remain protected and can count on Tarion for any warranty needs. Check out the “Resources” section of our website to find tools designed especially for real estate agents, or sign up for our Realtor Watch newsletter by emailing stakeholderrelations@tarion.com. If you have any questions about Ontario’s new home warranty, contact us at Tarion.com.
Howard Bogach is president and CEO of Tarion Warranty Corp., a private corporation established to protect the rights of new homebuyers and to regulate new home builders for more than 40 years.
