Tarion: Warranty Coverage Coming For Condo Conversion Projects

By NextHome Staff
June 23, 2017
Chances are you have seen advertisements for condominiums that are being developed using an existing building, such as an empty office building, an old church, or even a de-commissioned factory.In the past, these projects have not been covered by Ontario’s new home warranty program, creating a gap in consumer protection coverage. But that is about to change.The Ministry of Government and Consumer Services and Tarion are planning to have warranty coverage for residential condominium conversion projects begin in January 2018. Tarion is proposing that these protections would apply to projects where the first arm’s-length agreement of purchase and sale is signed after the effective date.What is a residential condominium conversion project? It’s a conversion of an existing building to a residential condominium project where pre-existing elements of the existing building, such as the foundation and frame of a church, will be retained and incorporated into the project.The intention is that the coverage would exclude the conversion of buildings that were primarily for residential purposes, such as rental apartments, unless otherwise specifically permitted. There are two reasons for this exclusion.First, the objective is not to reduce the stock of rental apartments. This is especially important for urban centres experiencing a shortage in rental units.Second, rental apartment buildings that are being converted usually retain most original building components, with only minor changes made to the building. By contrast, other types of conversions typically renew or replace most building components.Under the proposed new law, all of the warranties contained in the Ontario New Home Warranties Plan Act would apply to residential condominium conversion projects with one exception — the pre-existing elements would not have the warranty that they have been constructed in a workmanlike manner and are free from defects in material.All other one-year warranties, including that the home is constructed in accordance with the Ontario Building Code, would apply to the pre-existing elements and the rest of the residential condominium conversion project.In addition, all other warranties would be in place for residential condominium conversion projects, including the pre-existing elements. These include: two-year warranties for water penetration and defects in work and materials in the electrical, plumbing and heating delivery and distribution systems; and the seven-year warranty for major structural defects.The new law also brings about a change in the regulation of builders and vendors involved in a residential condominium conversion project.Currently, only builders and vendors of new-build condominium projects must be registered with Tarion. However, beginning on the effective date of the legislation, builders of residential condominium conversion projects and vendors who wish to sell units in these projects must also be registered with Tarion, further enhancing consumer protection for Ontario new home buyers.

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