5 Most Frequently Asked Questions
By Mark Weisleder
1. What is the Home Construction Regulatory Authority (HCRA) and what is Tarion?
The HCRA licenses the people and companies who build and sell new homes in Ontario. Tarion is the government agency that administers Ontario’s new home warranty program. This includes investigating warranty claims, resolving disputes between owners and builders, and managing the Guarantee Fund, an important financial reserve to help protect Ontario consumers.
2. What due diligence should a consumer do in advance of signing an agreement with a builder?
A new home buyer should not depend on Tarion to resolve all their issues in a timely manner. In some cases, it can take years. It is very important that before signing any contract with a home builder, you research other homes or projects completed by the builder. Go visit the homes or the development and ask the current homeowners three important questions:
a) Was the home completed on time?
b) Did the builder deliver what they promised?
c) Did the builder correct any deficiencies in a timely manner?
You can also search the Tarion website to find out if any claims were made against a builder.
3. Is the deposit I pay for a new home protected?
Not all deposits are protected by Tarion. If you pay a deposit directly to a builder, 10% of the purchase price is protected, up to a maximum of $100,000. For a new condominium, only $20,000 is protected. This is why you should pay all deposits in trust to the law firm acting for the builder. If the law firm holds the funds, your full deposit will be protected.
4. What if the builder is delayed?
The builder must set out a time frame in your agreement with a schedule of critical dates, showing the very last day they could complete your home. This can be several years into the future. The builder may be able to extend these dates if an unavoidable delay occurs. This is what happened as a result of Covid, and could also occur, for example, if there is a strike affecting construction. If the builder is late, then the consumer may have a right to cancel the agreement or claim a delay fee, currently at $150 per day, to a maximum of $7,500.
What if the builder goes into receivership?
Unfortunately, this does not give a buyer an automatic right to cancel their agreement or demand their deposits back. You are still subject to the time periods for completion stated in your agreement. In most cases, you will have to wait and see how the appointed receiver wants to deal with your agreement. This could result in the cancellation of the agreement or a request for an increase in the price paid to continue.
As you can see, do your homework before you sign an agreement with any builder!
