Recently, the Globe and Mail mapped out the growth of Toronto’s condominium market since the 1960s. The article states that 50 years ago, house prices were rising steadily, causing anxiety for young couples. Condos became an affordable solution. Sound familiar? Not too different from today’s housing market.
Since 1976, the popularity of condos has steadily gone up, and so have the price tags. Thankfully, the warranty protections for new condo buyers have increased as well. Here’s a condo’s story, from Tarion’s perspective.
A condo story by the numbers
The Globe and Mail article maps out where Toronto’s condos have been built as well as the number of units added over the years. Tarion has been keeping records of Ontario’s new condos since the new home warranty and builder registration became mandatory in 1976.
Over the years, the price of condos has risen; so have the number of new condos enrolled in the warranty. The median price of a new condo in 1976 was $43,000. Bragging rights if you got the answer right, and likely a happy pay day in your future if you still own one from that time.
As condos have gained popularity over time, Tarion has increased protection measures to help buyers make their purchases with confidence.
Condo buyers are protected from the time they sign a purchase agreement to up to seven years after their new building is registered.
Recounting the protections
Condo buyers are protected from the time they sign a purchase agreement to up to seven years after their new building is registered. Here are just some of the protections that Tarion has put in place:
Builders are vetted by Tarion
Before breaking ground, condo developers are subject to strict registration requirements from Tarion. The registration process differs for mid- and high-rise condos builders compared to freehold home builders. In addition to ensuring financial and technical competence, Tarion staff meet with these builders before registration is granted to ensure they have an experienced condo construction team in place. This includes architects, engineers and lawyers who have previous condo building experience.
Deposits are protected and delays are compensated
If the project is not completed for occupancy, deposits are protected by trust requirements under the Condominium Act. As an additional measure of protection, Tarion covers deposits for up to $20,000 per unit.
Buyers are also entitled to delay compensation up to $7,500 if occupancy of their unit is delayed beyond what is specified in the purchase agreement or if the occupancy date has not been properly extended.
Additional costs are clearly outlined
Additional charges, fees or other anticipated adjustments to the final purchase price, such as for gas, hydro or development levies, must be itemized in a single schedule to the purchase agreement. Tarion added this schedule in 2012 to provide buyers with a better picture of the types of additional costs that may be added to the purchase price on closing.
Inspections during construction are mandatory
During construction, two kinds of inspections occur. Municipal building inspectors will ensure that the building meets the Ontario Building Code at key stages of construction. As an additional consumer protection measure, Tarion requires builders to engage an independent professional (such as an architect or engineer) to provide Tarion with ongoing reporting at certain stages of construction. Tarion’s process outlines what needs to be inspected, who can conduct the inspections, and how often reports must be completed.
The warranty coverage is extensive
Once you take occupancy, there is a warranty on your unit. A separate warranty on the common elements starts when the condo project is registered. Your condo’s warranty is provided by the builder and backed by Tarion. Together, these warranties provide coverage for a wide range of issues, including unauthorized substitutions, defects in the electrical, heating and plumbing systems, issues with water penetration, violations of the Ontario Building Code and major structural defects. Your builder is required to provide a Homeowner Information Package, explaining what is and isn’t covered, how to make a claim and when to involve Tarion. Warranty claims relating to the condo’s common elements are dealt with by the condo’s board of directors.
Tarion is working towards extending warranty coverage to certain residential condominium conversion projects, which were previously excluded from coverage.
Condo conversions will soon have warranty coverage
Continuing with our long history of increasing protections for buyers, Tarion is working towards extending warranty coverage to certain residential condominium conversion projects, which were previously excluded from coverage. A residential condominium conversion project is the conversion of an existing non-residential building into a residential condominium where pre-existing elements of the existing building, such as the facade or foundation, will be retained and incorporated into the project. This change is expected to come into effect in early 2018.
As of last year, the number of condo units under warranty rose to 23,718, with more than 22,000 being added in 2016 alone. With a median price of $339,801.63, it’s important to know how your home is protected. If you are among the thousands of new condo buyers, make sure you get to know Tarion, and the protections in place so your condo story is a positive one.
Tips for using Tarion
- Before purchasing a new condo, read our blogs on What to Ask Your Real Estate Lawyer Part 1 and Part 2.
- Check out tips for making the deal.
- Read the Homeowner Information Package for Condominium Owners so you know your responsibilities as a new condo owner.