Warranty Protection on Buying Pre Construction Real Estate

When buying a new construction condo in Ontario, the Tarion Warranty Corporation provides protection to buyers under the New Home Warranty Program. Membership in this program is mandatory for new construction builders and offers protection to buyers of new construction in terms of a deposit protection, defects in the workmanship and materials and protection against delayed closings and occupancies.

The program covers buyers for a number of items but one very relevant item in this market especially is a deposit guarantee. With news about new construction condo projects not moving forward, it is a reassuring to know that the buyer is covered for up to $20,000 (plus interest) depending on the deposit that was put down if the builder is unable to complete the transaction.

Before the possession date of a new construction condo, the buyer is escorted through the unit with an inspector to point out any defects that need to be addressed by the builder. New construction condo buyers are covered for material and workmanship defects in their new condo for one year starting the date of possession. There is a 2 year and a 7 year warranty as well, which covers major defects in the unit.

Another issue that is very important to today’s real estate market relates to delayed occupancy dates. The condo builder is legally permitted to delay a new construction project as long as they provide the buyer with proper written notice. If however the buyer is not notified as required, the buyer is entitled to seek compensation. One thing to note is that compensation will not be paid if the delay was caused by the buyer themselves or if the delay was not under control of the builder (strikes, floods etc). If on the other hand a developer finishes a new construction project early, the buyer is not required to accept it.

Buyer beware. This applies more to homes than condo apartment buildings but one thing to watch out for are properties which appear new but actually are just extensively renovated or are actually built on old foundation. The Tarion Warranty does not apply to “new” homes which have been renovated or have been built on existing foundation. If you are unsure about whether the property is covered under Tarion Warranty, ask your Realtor.

Buying new construction can be a great investment and an exciting process to be a part of. When buying what appears to be a new construction property ask if the Tarion Warranty is applicable.


  1. Wyn says

    Some really interesting points you have written. Aided me a lot, just what I was looking for : D.

  2. Uni says

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  3. Annie says

    I just read your article on Warranty Protection on Buying Pre Construction Real Estate and want to thank you for it.

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