Changes are coming to Ontario’s new home warranty program

Here’s what you need to know

In March, Tracy MacCharles, Ontario’s Minister of Government and Consumer Services, released Justice Cunningham’s Final Report of his review of Tarion, and announced some immediate actions based on the report’s recommendations. The most substantial change is structural: the government is splitting Tarion into two new Delegated Administrative Authorities (DAA). One will continue with Tarion’s current mandate to provide a warranty to Ontario’s new home owners.The other will continue with Tarion’s mandate to regulate new home builders and vendors. Naturally, these changes have left many new home buyers, owners and builders wondering how the changes will impact them. Here’s what we know so far.

Nothing has changed just yet!

It’s important to stress that these changes will take time. If you are in the process of buying a new home, or live in a home that is less than seven years old, your warranty rights and responsibilities remain unchanged. Similarly, all builders will continue to be regulated by Tarion. When process changes are ready to take effect, Tarion will work closely with the government to ensure that home buyers, owners and builders are properly informed. In the meantime, it is business as usual.

Deposit protection for freehold homes will be reviewed.

Last year, Tarion made a commitment to review deposit protection for Ontario’s new home buyers. The current cap for freehold homes ($40,000) was introduced in February 2003. Ontario’s marketplace has changed dramatically since then. The price of new homes has increased across the province – most notably in the Greater Toronto Area (GTA). Recent events have made clear that many home buyers, particularly in the GTA, may be vulnerable to losses for deposits – as well as upgrades and extras – that far exceed the maximum amount recoverable under current warranty provisions.

 

Home safety. House under glass bell jar. 3D rendering with clipping path

 

For that reason, we are pleased that the government requested that we conduct an immediate review of deposit protections for freehold purchasers.

 

For that reason, we are pleased that the government requested that we conduct an immediate review of deposit protections for freehold purchasers. That process is underway, and we look forward to speaking to stakeholders as we conduct a thorough review and make recommendations for change. (Note: For condominium purchasers, deposits and upgrades/extras are already substantially protected by the trust requirements of the Condominium Act.)

This review is scheduled to be completed this year. It is our expectation that the  new regulations will come into force in January 2018.

Continued Dispute Resolution process improvements

Two years ago, Tarion hired an independent dispute resolution expert to review our processes and make recommendations for improvements. Throughout 2016, we have been actively implementing those recommendations. Justice Cunningham recommended that we continue with these improvements, and we are pleased to be doing exactly that.

Builder registration processes will change

When Ontario’s new home warranty program began in 1976, Tarion was expected to both administer the new home warranty and regulate builders. Together, these two functions have gone hand-in-hand for more than 40 years. We evaluate which builders are capable of building and selling new homes in Ontario and oversee how they handle their warranty obligations and their after-sales service. Both factors are taken into consideration when assessing their ongoing licensing status.

Over the years, Tarion has made sure builders have been held to increasingly higher standards as the building process and the entire industry has become more complex. The registration process for builders has become more rigorous – including the most recent requirement for builders to complete educational competencies before they can become registered.

As both registrar and administrator, Tarion uses its daily experiences of inspecting and evaluating warranted defects to help builders improve their after-care service. We educate licensed builders across the province about the most common warranty issues and how to resolve them – all part of an effort to improve the new home buying experience. We also work with builders, vendors and homeowners throughout the warranty process so that all parties can work effectively and fairly together. We remain committed to this process.

The government has announced that new legislation will be introduced in the fall to separate Tarion into a warranty provider and a builder regulator, in part to avoid the appearance of any conflict of interest and to provide greater accountability to government.

Of course, there’s one thing that has not and will not change…

Tarion has been here for new home buyers for more than 40 years, and we are still here for you. We’ve been a trusted resource for decades, and we will continue to support Ontarians as they buy and live in their new homes. Want to learn more about us? Find out more here.