Wednesday, July 3, 2013

Understanding Builder Warranties – Tarion: What is it?

Tarion is a private corporation that was built around 30 years ago. The company has the sole purpose of protecting the rights of home buyers and regulating new home builders. The responsibility of the company includes controlling of the Ontario New Home Warranties Plan Act in different cities of Ontario including the real estate in Ottawa.

The new head of the company is concerned that many new home owners are not aware of the exact amount of coverage they are entitled to. In September, he addressed the Greater Ottawa Home Builders’ Association and reinstalled the concept that buyers had to be educated.

Tarion was built to protect new buyers and control builders by making sure that there were no signs of shoddy workmanship. New average mid-sized homes must come with a warranty. The warranty costs around $1,000 and is usually passed from the builder to the buyer. The warranty covers the first seven years of the new house.

The first year of the warranty covers all aspects of workmanship. The second year covers building code and operating systems. The remaining years of the warranty focus on all major structural defects. It is important that all new houses are registered for warranties by the builders. Any new home that is built and sold with an Agreement of Purchase and Sale without a warranty would be categorized as an illegal building, certain acceptations do exist see below. Another way that builders can trick new home buyers is that they build the house as consultants and register the building permit in the buyer’s name. This legally makes the buyer responsible for all problems they face during the initial year and they cannot do anything about it.

If you buy a home from a registered builder you still need to understand the terms of warranty that are applicable to your property. Houses are made with natural material and therefore are subject to change. The issues related to these changes are mostly resolvable and if they are not, they can be sent to conciliation.

If you are buying a resale home that was built less than seven years ago, the house is still under warranty and the previous owner has no right to withhold the warranty. Buyers are also encouraged to send their warranty forms within 30 days, for a one or two year warranty term and register themselves at MyHome section on Tarion’s website.

There are a few types of homes that are not subjected to builder warranties: condo conversions, vacant land condos, common element condos, owner-built homes, modular homes, as-built homes, model homes, mobile homes and shell homes among a few others. You must remember to ask all the necessary questions to your real estate agents in Ottawa.

The new changes in the warranty program have helped Canadian buyers and home builders improve standards and make better decisions. For further information contact visit

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