Special Considerations for Contract Homes
A “contract home” involves someone who already owns land and enters into a “construction contract” with a builder to build a home on their land. This is very different than buying a pre-construction home (and the property) through a standard new home purchase agreement. To learn more about warranty coverage for contract homes, visit Contract Homes.
A note on units in a residential condo conversion
As of January 2018, residential condominium conversion projects qualify for warranty coverage, and is applied to projects where the first Agreement of Purchase & Sale (APS) is signed on or after this date. Condominium conversions benefit from the same seven-year warranty coverage as other new homes, with one exception: the pre-existing elements are not covered by the one-year warranty on workmanship and materials. This exception is because the pre-existing elements are often much older and cannot be certified in the same way as the new construction.
One-Year Warranty
Now that the purchaser has taken possession of their newly constructed freehold home or condominium unit, they are eligible for year one warranty coverage. This coverage begins on the date of possession and lasts one year from that date and includes items such as defects in work and material and unauthorized substitutions. See below for what the year one warranty covers.
Coverage for Freehold, Contract & Condo Units
- Requires a home is constructed in a workman-like manner and free from defects in material
- Protects against Ontario Building Code violations
- Applies for one year, beginning on the home’s date of possession even if the home is sold
- Protects against unauthorized substitutions
- Requires the home to be fit for habitation
Coverage for Residential Condo Conversion Projects
Residential Condominium Conversion Projects Coverage:
Pre-existing elements are not covered by the one-year warranty on workmanship and materials. This exception is because the pre-existing elements are often much older and cannot be certified in the same way as the new construction. All other one-year warranty protections, including that the home meets Ontario Building Code regulations, would apply to both the pre-existing elements and the new components of the project.
Coverage for Household Appliances
The Ontario New Home Warranties Plan Act does not consider household appliances, such as refrigerators, stoves, and washer/dryers, to be part of the home. Instead, they are viewed as personal property belonging to the homeowner, or "chattel."
Household appliances therefore have limited coverage under the new home warranty when they are supplied by the builder. Defects related to their installation, including damage caused during installation, are covered by the one-year warranty since they are due to the builder’s workmanship. The warranty does not cover:
- Out-of-the-box aesthetic damage (e.g. scratch on the stove top)
- Manufacturer defects (e.g. circuit board failure)
- Unauthorized substitutions (e.g. different brand)
- Missing appliances
Homeowners with the above situations should pursue the matter with their builder and/or the appliance manufacturer.
Two-Year Warranty
Your new home warranty continues to provide coverage into year two and include items such as water penetration, heating and electrical. This coverage begins on the home’s date of possession even if the home is sold. See below for what the year two warranty covers.
What is Covered freehold, condo units & contract homes
- Protects against water penetration through the basement or foundation walls
- Protects against defects in work or materials that result in water penetration into the building envelope
- Covers defects in work or materials that result in the detachment, displacement or deterioration of exterior cladding (such as brickwork, aluminum or vinyl siding)
- Covers defects in work or materials in the electrical, plumbing and heating delivery and distribution systems
- Applies for two years, beginning on the home’s date of possession
- Protects against violations of the Ontario Building Code that affect health and safety
Residential condominium conversion projects coverage
Coverage would apply to both the new construction and the pre-existing elements. These include: the two-year warranty for water penetration and defects in work and materials in the electrical, plumbing and heating delivery and distribution systems.
Seven-Year Major Structural Defect Warranty
Your home’s seven year warranty covers major structural defects (MSD) and begins on the date you take possession of the home and ends on the seventh anniversary of that date.
I) Results in failure of a structural load-bearing element of the building
II) materially & adversely affects the ability of a structural load-bearing element of the building to carry, bear & resist applicable structural loads for the usual & ordinary service life of the element
What is covered
The seven year MSD warranty includes significant damage due to:
- Soil Movement* & Major Cracks in Basement Walls
- Chemical Failure of Materials & Environmentally harmful substances or hazards. (i.e., Excessive radon levels)
- Collapse or serious distortion of joints, or roof structure
What is not covered
The seven year MSD Warranty specifically excludes the following:
- Damage to drains or services
- Dampness not arising from failure of a load-bearing portion of the building.
- Damages to finishes
Residential condominium projects coverage
Residential Condominium Conversion Projects Coverage:
The seven-year warranty for major structural defects applies to both new construction and the pre-existing elements for residential condominium conversions.
Additional Coverages
Extended Warranty for Missing Items
Your new home may not be finished on the date you take possession or occupancy and your warranty begins. If there are any items that are missing at this time, your builder is expected to extend the warranty on them so that they receive the full coverage they’re entitled to under the new home warranty.
Which items qualify for extended warranty?
The extended warranty applies to items that are entirely absent from your home on the date of possession or condominium occupancy date.
The extended warranty does not apply to:
- Items that are present on the date of possession but later replaced.
- Items that are present on the date possession but incomplete, unfinished, or defective.
How does the extended warranty work?
The extended warranty on a missing item begins on the date your builder installs it and lasts for one year (or more, depending on how long the new home warranty covers it).
To protect your extended warranty on a missing item, you must report its absence to Tarion on a warranty form within the first year of possession or occupancy.
If you need to report a defect related to an extended warranty item after it has been installed, do as follows:
- If you are still within your first year of warranty, report it to your builder and Tarion on your next warranty form.
- If your first year of warranty has expired, complete and submit an Extended Warranty Form. To obtain an Extended Warranty Form, contact Tarion.
Your builder is expected to resolve defects covered by the warranty that are reported during the extended warranty period. If needed, Tarion can provide assistance and resolve your claim.
Temporary Relocation Allowance
As the owner of a new home, you may be faced with unexpected expenses (such as temporary accommodation, food, or storage) because your home is uninhabitable due to a warranted item or as the result of the repair or remediation of a warranted item.
Your new home warranty includes a Temporary Relocation Allowance to help cover these costs.
What kinds of situations qualify for the allowance?
Examples of situations which may cause your home to be uninhabitable include:
- the kitchen is unusable;
- all toilets and/or all bathtubs/showers are unusable;
- the staircase to the upper floor is unusable or unsafe;
- the structural integrity of the home is adversely affected;
- there is toxic mould or another harmful substance.
How does the Temporary Relocation Allowance work?
If your builder has arranged for a repair or remediation of a warranted item and determines that you will incur expenses because your home cannot be lived in during the repair, they are expected to provide compensation of up to $150 for each day that your home cannot be lived in , up to a maximum of $15,000.
If your builder fails to provide this compensation to you, you can apply to Tarion for assistance.
For more information about the Temporary Relocation Allowance, please refer to Registrar Bulletin 7.