Deposit Protection
If you sign a purchase agreement for a new home or condominium unit and give your builder a deposit, Tarion protects those funds up to a certain limit in the event that the sale is not completed for the following reasons:
- Your builder goes bankrupt
- Your builder fundamentally breaches the purchase agreement
- You have a statutory right to treat the purchase agreement as terminated.
Deposit protection for freehold homes
If you signed your purchase agreement before January 1, 2018, your deposit is protected by Tarion up to a maximum of $40,000. If you signed on or after January 1, 2018, your deposit coverage depends on the purchase price of your new home. Please refer to the table below:
| Sale Price | Deposit Coverage |
|---|---|
| $600,000 or less | Up to $60,000 |
| Over $600,000 | 10% of purchase price (to a maximum of $100,000) |
Deposit protection for condominium units
Condominium unit deposits must be placed in trust under the provisions of the Condominium Act. If your purchase agreement is terminated by your builder, your deposit must be returned to you in full within 10 days. If your builder does not return your deposit, Tarion provides deposit protection of up to $20,000.
To ensure your deposit claim will be covered by Tarion, you should consult a lawyer before treating your purchase agreement as terminated.
How to make a claim
- Contact Tarion at 1-877-982-7466 to request a Deposit Refund Claim Form.
- Send the completed form to this address: Tarion Warranty Services Department 5160 Yonge Street, 7th Floor Toronto, ON M2N 6L9
- You will be asked to provide a copy of your purchase agreement, cancelled deposit cheque(s), and possibly other relevant documentation.
- All information and documentation you submit to Tarion will be provided to your builder and your builder will be given an opportunity to respond.
- Depending on the information, documents, and responses provided by you and your builder, it may take up to six months for Tarion to assess and resolve your claim. If your claim is disputed or complex, it may take longer to assess.
Condominium cancellations
When purchasing a pre-construction condominium, there is always a risk that the project could be delayed or cancelled. There may be many different reasons for a project cancellation. For example, the expected sales for the project may not materialize or the development approvals necessary for the project are not forthcoming.
For purchasers who are facing the cancellation of their project, review our page on occupancy dates, delays and cancellations for condominiums.
Custom Finishings
If the Agreement of Purchase and Sale or construction contract ("purchase agreement") included the right to select certain items of construction or finishing, such as colours and styles, these usually cannot be substituted without the purchaser's written consent.
Making Selections
If the Agreement of Purchase and Sale or construction contract ("purchase agreement") included the right to select certain items of construction or finishing, such as colours and styles, these usually cannot be substituted without the purchaser's written consent.
In addition, if the purchase agreement states that the new home will include a particular item (such as a certain model of appliance, or a particular brand of window), but does not give the purchaser the right to make a selection, these items can only be substituted with items of equal or greater quality
If the builder substitutes a selected item without the purchaser's consent, the purchaser can demand that the items be changed to what was originally selected or that the builder make a cash settlement. Examples include:
- Interior and exterior paint colours (not shadings)
- Design and colour of cabinets and counter tops
- Colour and type of kitchen and bath fixtures
- Floor finishes
Style of interior trim
Homeowners should contact the builder or seek the advice of a lawyer if they feel that an unauthorized substitution has occurred.
The process for Making Selections
- The purchaser is responsible for making the selections required within 30 days of the purchase agreement, or within any other time as agreed between the purchaser and the builder.
- If the builder cannot supply a purchaser’s selection, the purchaser must be notified in writing.
- The purchaser is then responsible for making another selection within 7 days of receiving the notice from the builder, or within any other time as agreed between the purchaser and the builder.
- If the purchaser does not make the original selection in time, or does not make new selections within 7 days, the builder has the right to substitute options of equal or better quality.
Financial Loss Compensation for Contract Homes
If you enter into a contract with a builder for the construction of a new home on property that you own, some or all of the money you give your builder under that contract may be protected. The following information will help in understanding your rights and making informed decisions.
What is Financial Loss Compensation
In general terms, a “contract home” is a home that is built on land (a vacant lot, for example) that is already owned by the prospective homeowner.
The home is constructed in accordance with a construction contract between the homeowner and a builder, and the builder (contractor) undertakes the performance of all of the work and the supply of all materials necessary to construct the completed home.
If a homeowner, rather than a builder (contractor), exercises significant control over the construction of a new home, or is responsible for contributing one or more essential element(s) to it, the home may no longer be characterized as a contract home, but rather it becomes an “owner-built home”. This is important because a contract home is entitled to statutory warranty coverage (except for Delayed Closing Coverage) but an owner-built home is not.
As an owner, the important thing to remember is that the statutory warranty is intended for homes where a builder does the work. It is not meant to protect a landowner who is building a home, or for situations where separate contractors are building different stages of a home.
If you are building a contract home, it is recommended that you consult a lawyer to assist you with the construction contract and explain your rights and obligations.
What is covered
If you enter into a contract with a builder for the construction of a new home on property that you own, some or all of the money you give your builder under that contract may be protected.
If your builder fails to substantially perform the contract, you may be entitled to compensation from Tarion for the difference between the amount you paid the builder and the value of the work and materials that were supplied, up to a maximum of $40,000.
Making a claim
To make a claim for financial loss protection, contact Tarion.
Please note that all documents you submit to Tarion may be provided to your builder and your builder will be given an opportunity to respond.
Depending on the information, documents, and responses provided by you and your builder, it may take up to six months for Tarion to assess and resolve your claim. If your claim is disputed or complex, it may take longer to assess.
Delayed closing/occupancy coverage & cancellations
When purchasing a pre-construction homes and condominium units, there is always a risk that the project could be delayed or cancelled. There may be many different reasons for a project cancellation. For example, the expected sales for the project may not materialize or the development approvals necessary for the project are not forthcoming.
For purchasers who are facing delays or cancellation of their project, the following information will help in understanding your rights. Select the type of home you are purchasing from the options below to see more information.
Already have possession of your new home?
Visit our section on coverage after you have moved in, also known as post-possession.