Every new home built in Ontario comes with a mandatory builder warranty backed by Tarion, a non-profit created under the Ontario New Home Warranties Plan Act. The warranty has two halves. Before you move in, it protects your deposit and compensates you for delayed closings. After you take possession, it covers defects in three periods: 1 year for workmanship and materials, 2 years for water penetration and the electrical, plumbing, and heating systems, and 7 years for major structural defects. You do not buy this coverage. It comes with the home by law, and it stays with the home if you sell.
We walk buyers through Tarion paperwork on every pre-construction deal. Here is what each layer actually gets you, with the current numbers.
Tarion and the HCRA are two different things
Buyers mix these up constantly, so let us separate them. Tarion administers the warranty program: it enrols homes, backstops builder obligations, and resolves claims. The Home Construction Regulatory Authority (HCRA) licenses and regulates the builders themselves. Before you sign with any builder, look them up in the HCRA's Ontario Builder Directory. It shows their licence status, the projects behind them, and any enforcement history. Two minutes there tells you more than an hour in a sales office.
Before you move in: deposit protection
If your builder goes insolvent, cancels the project, or fundamentally breaches the agreement, Tarion protects the deposits you have paid. For purchase agreements signed on or after January 1, 2018:
- Freehold home priced at $600,000 or less: up to $60,000
- Freehold home priced over $600,000: 10% of the purchase price, to a maximum of $100,000
- Condominium unit: your deposit sits in trust under the Condominium Act as the first layer of protection, and Tarion covers up to $20,000 if a deposit was not held in trust as required
Contract homes (where you own the land and hire the builder) also carry financial loss coverage of up to $40,000 if the builder fails to substantially perform the contract.
Note the freehold gap: builders on higher-priced homes often collect deposits beyond the $100,000 cap. We flag this on every freehold deal, and it is one more reason builder track record matters. Our guide to deposit structures covers this in detail.
Before you move in: delayed closing compensation
Pre-construction closings move. Your agreement includes a Statement of Critical Dates that governs how the builder may extend, and if the builder delays closing improperly or without the required notice, the warranty pays compensation of $150 per day for living expenses, to a maximum of $7,500. No receipts are needed for the daily amount, though costs like moving and storage require receipts. If the builder fails to give the required 10 days notice of a delay, compensation starts at $1,500.
One deadline buyers miss: a delayed closing claim must be made within 180 days of your closing date. Put it in your calendar at closing, not later.
After you move in: the 1, 2, and 7 year warranties
Post-possession coverage starts on your date of possession and runs in three periods.
Year 1: the broadest layer. The home must be free from defects in work and materials, fit to live in, and built to the Ontario Building Code. Unauthorized substitutions of materials or finishes are also covered. Think doors that do not close, cracked tiles, a furnace installed wrong.
Year 2: water and systems. Water penetration through the basement, foundation, or building envelope; defects in the electrical, plumbing, and heating delivery and distribution systems; and defects in exterior cladding that cause detachment or material damage. Building Code violations that present a health and safety risk are also covered.
Years 3 to 7: major structural defects only. This means significant failures in load-bearing elements or defects that materially compromise the home's structural integrity or use, not cosmetic issues.
How much the warranty pays
Coverage caps depend on when the purchase agreement was signed. For agreements signed on or after July 1, 2023, the maximums are:
- Freehold homes: $400,000
- Condominium units: $300,000
- Condo common elements: $100,000 per unit, to a project maximum of $3.5 million
- Environmentally harmful substances or hazards: $50,000
Agreements signed earlier carry lower caps (generally $300,000 per home), so check your own agreement date rather than assuming the current numbers.
How claims actually work
The process runs through Tarion's MyHome online portal. You document defects, submit them within the correct warranty period, and the builder gets a repair window before Tarion steps in to resolve or pay. Two habits make the difference between a smooth claim and a lost one:
- Take the pre-delivery inspection (PDI) seriously. It is your formal walkthrough before closing, and the PDI form is the record that a defect existed before you moved in. Bring a list, open everything, run the water, and write down every deficiency no matter how small it seems.
- Watch the calendar. Each warranty period has firm submission windows tied to your possession date. A legitimate Year 1 defect submitted late can become nobody's problem. When you take possession, diarize the end of Year 1 and Year 2 on day one.
Condos: your unit, the common elements, and interim occupancy
Condo buyers deal with an extra layer. Your unit carries its own 1, 2, and 7 year coverage, and the building's common elements (the roof, garage, hallways, shared systems) carry separate coverage that the condominium corporation claims on behalf of all owners. After the building registers, the corporation runs a performance audit of the common elements to catch defects while the warranty is open. As an individual owner, your job is your own unit: document it at the PDI and submit your own claims on time.
Interim occupancy is the other condo wrinkle. You may move in and pay the builder a monthly occupancy fee for months before final closing transfers title. Your possession date for warranty purposes is the start of occupancy, not final closing, so the Year 1 clock is often already running while you are still waiting to close. Confirm your exact possession date in writing and count from there.
What Tarion does not cover
The warranty is not home insurance and it is not a maintenance plan. Damage from normal wear and tear, poor homeowner maintenance, or alterations you make after closing is not covered. Appliances typically carry their own manufacturer warranties. And problems you accept in writing at the PDI without recording them can be hard to claim later. The pattern is simple: document early, submit on time, keep copies.
Where we fit in
We represent the buyer, never the developer, and the warranty is part of that. Before you sign, we check the builder in the HCRA directory and read the critical dates. At closing, we make sure the PDI is done properly and the warranty timelines are in your calendar. It is unglamorous work that saves real money.
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Frequently Asked Questions
Is the Tarion warranty free?
You do not purchase it separately. Every new home in Ontario must be enrolled by the builder, and the enrolment fee typically appears as a closing adjustment on your statement. The coverage itself is mandatory under the Ontario New Home Warranties Plan Act.
How long does the Tarion warranty last?
Up to 7 years from your date of possession. Year 1 covers workmanship, materials, and Building Code compliance. Year 2 covers water penetration and the electrical, plumbing, and heating systems. Years 3 to 7 cover major structural defects only.
Does the Tarion warranty transfer if I sell my home?
Yes. The warranty attaches to the home, not the owner. If you sell within the 7 year window, the remaining coverage continues for the new owner, which also applies to homes bought on assignment.
What is the maximum Tarion will pay?
For purchase agreements signed on or after July 1, 2023: up to $400,000 for a freehold home and $300,000 for a condominium unit, plus $100,000 per unit for condo common elements to a project maximum of $3.5 million. Older agreements carry lower caps, so check your agreement date.
What do I do if my closing is delayed?
Check your Statement of Critical Dates to confirm whether the builder followed the rules for extensions and notice. If not, the warranty pays $150 per day for living expenses up to $7,500. You must file the claim within 180 days of closing.
Does Tarion cover appliances or things I damage myself?
No. Appliances are covered by their manufacturer warranties, and damage from normal wear, poor maintenance, or alterations you make after closing is excluded. The warranty covers defects in how the home was built, documented and submitted within the correct period.
What is the Ontario New Home Warranties Plan Act?
It is the provincial law that created the new home warranty program and makes warranty coverage mandatory on new homes in Ontario. Tarion administers the program under that Act, which is why every new home built by a licensed builder carries the warranty automatically. You do not opt in and you cannot waive it.
When does Tarion warranty coverage start?
Coverage begins on the date you are entitled to take possession of the home, not the date you signed the agreement. For a freehold home that is your closing date. For a condominium unit it is your occupancy date, while warranty on the building's common elements starts when the condominium corporation is registered.
What is not covered by the Tarion warranty?
Tarion does not cover damage from improper maintenance or neglect, alterations and additions you make yourself, materials or finishes you supply, or surface defects you accepted in writing at possession. Damage from an act of God such as a tornado or earthquake is excluded, though normal Ontario weather like heavy rain, snow and ice is not treated as an act of God.
Does Tarion cover window and roof leaks?
Water penetration through the roof or the building envelope falls under the two year warranty, so leaks that appear in the first two years after possession are generally covered when they result from a defect in work or materials. Report them in writing within the correct warranty period, because damage that gets worse because it was left unreported can be treated as a maintenance issue.