Consumer Protection : Getting The Most Out of Ontario's New Home Warranty Program

By NextHome Staff
February 21, 2017
Value for your money is top of mind for consumers these days, a notion that was reinforced in a New York Times article I read recently about extended warranties.The article talked about the practice of encouraging consumers to purchase an extended warranty, above and beyond the manufacturer’s warranty, when they buy a product.It got me thinking about warranties in the context of new homes, specifically the Ontario new home warranty. In Ontario, new home builders by law are required to provide a set of warranties that last up to seven years on every new home they build. The builder must enroll the home in the warranty program before construction even begins.h_mar17_con_prot_1The enrollment fee — ranging from $385 to a maximum of $1,500, depending on the value of the home — is paid by builders. And yes, this cost is often passed on to the purchaser, like almost every other cost a builder incurs, including overhead or administration fees.Yet, for this one-time investment, new homebuyers are provided with a wide range of protections.The core of the Ontario new home warranty program provides coverage for defects in workmanship and materials and violations of the Ontario Building Code for up to seven years to a maximum of $300,000. However, there are a number of additional protections, not available in other jurisdictions, that provide extra value to Ontario’s new homeowners.For example, even before you move into your new home, the warranty program protects your deposit up to $40,000 for freehold homes and $20,000 for condominium units. In addition, there is compensation for delayed closing or occupancy. If your builder agreed to deliver your home by a certain date (whether the original date or a date that was properly extended) and fails to deliver on time, your builder may be required to compensate you for that delay. The maximum compensation is $7,500.The warranty also protects you against unauthorized substitutions. If your choice of baseboard trim was contained in your Agreement of Purchase and Sale and accepted by the builder, then your builder must provide that trim. If it’s not available, your builder must ask you in writing to make another selection.Coverage for radon gas is another warranty feature not found elsewhere in Canada. If excessive levels of radon gas are found in your home anytime during the seven-year period of your warranty, you may be covered for remediation of the gas.Tarion also addresses risks associated with illegal building. Illegal builders typically avoid enrolling a new home in the warranty program. This means the homeowner is likely unaware of their rights and responsibilities under the warranty. The good news is that if the builder fails to enrol a home, there may still be a warranty for the home.All of these protections add up to provide Ontario’s new homebuyers with comprehensive warranty coverage that is also affordable.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.Tarion.com

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