Special Report: Tarion
How to protect yourself when building your own home
You’ve bought the perfect piece of property and now you want to build your dream home. Before you start looking for a builder, there are some important things you should do that will help protect you and your investment.
When you hire someone to build your home, it’s called a “contract home” because it is built on your own property, not on property being developed by a builder.
Contract homes come with certain risks. For example, the relationship between you and your builder can potentially break down. Fortunately, Ontario’s new home warranty provides protection for consumers in situations like this. If your builder fails to substantially fulfill your contract, you may have coverage for your financial losses.
The following are tips that can help protect you as you negotiate with your potential builder:
- Make sure your builder is registered with Tarion. If they are not, they are operating illegally. You can confirm that the builder you want to hire is registered by visiting the Ontario Builder Directory at Tarion.com.
- Get a written contract. Verbal agreements can easily fall apart and can’t be verified, making it difficult to prove what was agreed to between you and the builder. Attach plans, specifications and construction schedules and document all change orders.
- Get help from a real estate lawyer who has knowledge and experience with contract homes. The lawyer can prepare the contract and help you understand your rights and obligations under the contract.
Of course, even a thorough contract cannot prevent agreements from breaking apart for a variety of reasons. So if your builder has stopped working on your home, you need to contact Tarion for help.
The first thing Tarion will tell you is to stop all work on your home and do not let anyone else work on it. If you submit a claim to Tarion, it needs to assess your home in the state it was in when your builder stopped construction.
The next step is to submit a financial loss claim to Tarion. If you’re able to show that your builder failed to substantially perform your contract through the builder’s default, and that the payments you made to your builder exceed the value of the work and materials provided by the builder, Tarion may compensate you for that shortfall, to a maximum of $40,000.
In an ideal world, nothing will go wrong as you build your dream home. The more prepared you are however, the more peace of mind you’ll have. And if things do go wrong, Tarion is there to help.