The Role of Tarion

Tarion is a private corporation that was established to protect new home buyers and also regulate new home builders.

Tarion is responsible for administering the Ontario New Home Warranty Plan Act. This act details the protection that is provided by law to the new homeowners of both freehold properties and condominiums.

The primary role of Tarion is to ensure that builders adhere to the legislation. Tarion will step in and protect the buyers if a builder fails to fulfill their warranty obligation.

All builders and vendors must be registered with Tarion in order to build homes and condos legally in Ontario.

Tarion acts as a "regulator" for new home builders in Ontario. They register builders, enroll new homes for warranty coverage, mediate warranty disputes between homeowners and builders, and investigate illegal building practices.

Tarion protection begins prior to the homeowner taking possession of their new home. Once a deposit is made to the builder, this deposit money is protected should the builder not complete the transaction (as long as it is not the fault of the buyer).

Deposits on freehold properties are protected up to $40,000 if the agreement of purchase and sale was signed on February 1st, 2003 and onward, or up to $20,000 if the agreement was signed prior to February 1st, 2003.

Deposits for condominiums units are protected up to $20,000.

If there is a delay in a closing that is a result of the builder and there wasn't proper notice given to the buyer, a homeowner may be eligible for compensation. It should be noted that a builder can delay the closing date up to five days without having to give notice or compensation.

The work and material warranty periods run between one to two years against defects in workmanship or materials. There is a seven year warranty against major structural defects (referred to as MSD).

Coverage begins from the date of possession and will remain in effect until the expiry date of the warranty. The coverage is transferable, so if the property was sold the remaining warranty coverage can be passed on to the new homeowner.

There are numerous exclusions that a buyer should be aware of to avoid any misunderstanding.

Some examples of items not covered in the warranty include:

* damage from floods, wars, riots or vandalism

* defects in materials, design and work which was completed by the homeowner and/or his contractor.

* damage which is the result of inadequate maintenance or neglect of the house

* normal shrinkage of material that dry out after settlement such as nail "pops" or normal concrete cracks

*alterations or changes made by the homeowner

Tarion also protects buyers if the builder made any unauthorized substitutions. Examples include:

*interior and exterior paint colour

*design and colour of kitchen cabinet and counter top

*floor finishes

If there are any issues that are not resolved with the builder, the homeowner is required to complete and submit to Tarion specific home warranty forms within a set time period.

If a homeowner is not satisfied with a Tarion decision, there is an appeal process available for buyers.

If a builder declares bankruptcy, Tarion will work directly with the homeowner to settle any outstanding warranty issues.

An advocacy group, Canadians for Properly Built Homes (CPBH), was formed in

2004 to identify issues with Tarion. One of the concerns was that any reviewing of decisions is administered by a board referred to as the Licensing Appeal Tribunal (LAT). The feeling is the group is partial in their decisions making process. According to this group, homeowners presented

208 warranty issues to the Licensing Appeal Tribunal (LAT) and only succeeded in 32 of these cases (15.8%). Additionally, homeowners appealed 23 decisions of major structural deficiencies to the LAT tribunal last year but didn't succeed in any of them.

One recommendation is that the 16 member Tarion board be limited to one or two builder member representatives (currently there are 7).

There has been additional recommendations that Tarion also extend their coverage to include all building, plumbing and electrical code violations, lot grading, model homes (currently not covered), and design flaws.

In conclusion, the objective of Tarion is to protect buyers of new homes or condominiums from deposit concerns, closing delays and material, work and structural issues. Whilst, there is always room for improvement, Tarion does provide new homeowners with a piece of mind before and after the buyer takes possession of their brand new home!