Some things to know before buying a new home or condo
(NC) — There’s no doubt that condominiums are an increasingly popular choice for new homeowners. In 2016 alone, more than 22,600 new units became homes for Ontarians who are looking for the condo lifestyle and amenities. If you’re thinking of joining them, a good first step is to understand the difference in responsibility between what you own and what all the building’s unit owners share.
A benefit of purchasing a new condominium is the mandatory warranty that is provided by your builder and backed by Tarion, the warranty’s administrator. There’s a separate warranty for your individual unit and another for the building’s common elements. Your unit’s warranty provides coverage for deposit protection and delayed closing before you move in. After you take occupancy, it covers defective materials, building code violations and unauthorized substitutions of items agreed to in the purchase agreement.
Your builder is required to provide you with a homeowner information package, explaining what is and isn’t covered in your individual unit, how to make a claim and when to involve Tarion. As owner, you are responsible for understanding and managing the warranty that comes with your unit and to submit warranty claims on a timely basis.
All condos come with some common elements — like roofing, parking, exterior cladding and some mechanical systems. The homeowner package should clearly outline which are considered common elements.
The common element warranty is managed by your condo’s board of directors or delegated to a property manager. The board is made up of a group of unit owners who are elected to run the condominium corporation on behalf of all owners.
The board must arrange for a post-construction performance audit, which will determine if there are any major deficiencies in the common elements. If there are, the board should report them to the builder and to Tarion.
Any warranty claims relating to the condominium’s common elements must be dealt with by the board of directors, but as a unit owner you should report any common element issues to the board in writing.
If a warranty claim must be made, some boards will identify a designate who will act as the condo’s representative; others may choose to have a property management company fulfill this role. Once a claim is submitted, the builder has 18 months to complete the required repairs.
KNOW WHAT’S COVERED
While the builder provides the Tarion warranty, its cost is often passed on to the new homebuyer. But this one-time fee, ranging from $385 to $1,500 depending on the value of the home, gives you significant value for your money. You’ll receive as much as seven years of warranty protection to a maximum of $300,000 per home or condo unit.
The warranty program has milestones to address specific issues that can arise after you have moved in to your new home. Here is a simple breakdown of the main coverages:
This warranty applies for one full year beginning when you first take possession and even if the home is sold during this time. It requires that your home has been constructed in a workman-like manner and is free from any defects in materials used. It also requires that your home is free of Ontario Building Code violations and is fit for habitation. In addition, the warranty protects against unauthorized substitutions.
This warranty begins on the date you take possession of your home, or occupancy of your condo unit. It provides protection against water penetration through the basement or foundation walls, or through windows, doors and caulking because of defects in materials or workmanship.
The warranty also covers defects in materials or workmanship in the electrical, plumbing and heating systems in your home, as well as defects in work or materials that cause detachment, displacement or deterioration of the exterior cladding, such as brickwork or siding.
Finally, the two-year warranty protects against violations of the Ontario Building Code that affect the health and safety of homeowners.
This warranty covers major structural defects and begins on the date you take possession of the home and ends on the day before the seventh anniversary of that date. It protects against defects in materials and workmanship that adversely affect a load-bearing part of your home’s structure, causing it to fail or significantly affect your ability to use the house as your home.
In most condominium projects, warranty coverage also includes the shared areas of the building, referred to as common elements. This coverage is addressed by the condominium corporation and provides up to $50,000 of protection per condo unit to a maximum of $2.5 million.
SOME TIPS BEFORE YOU BUY
You’ve found the newly built home you’ve been looking for and are ready to make one of the biggest purchases of your life. But do you know how to protect your new home?
Before you sign an Agreement of Purchase and Sale (APS), consider these tips. Review the APS with a real estate lawyer to ensure you understand exactly what is included in the price of the home. If you are buying a condominium, review the disclosure statement to understand which items are part of your unit and which are considered common elements. Make sure everything that is agreed upon is reflected in writing.
If construction has not started on the home or condominium, find out when the builder will begin and how you will be notified if there is a delay. Be sure that you and your lawyer document all details regarding deposits and delayed closings or occupancy. A standard Addendum is required to be included in the purchase agreement. It provides additional information, as well as your rights concerning delays in construction. It is important to review this document with your lawyer.
At the signing of the purchase agreement, you will likely be required to provide a deposit for your home. Understand that deposits on freehold homes are protected up to a maximum of $40,000 by Tarion. Condominium deposits are covered for up to $20,000 by Tarion and deposits over $20,000 are protected by the trust and excess deposit insurance provisions of the Condominium Act, 1998.
Ask when you will be contacted to make selections for interior and exterior finishes. Each builder has a different policy for finalizing selections.
Ask your builder who to contact about scheduling your pre-delivery inspection and when it will take place.
Ask about the builder’s after-sales service policy and who to contact should an issue arise. Ask who to contact in emergencies, too.
Read about the warranty that comes with your new home and understand what to do if you think you have a claim.
Sign up for MyHome, the portal where you can manage your warranty online, at