If you are considering the purchase of a newly built home, there is some good news. Unlike resale homes, when you purchase a newly built home, you receive the benefits offered by Tarion Warranty Corporation (“Tarion”), the corporation that administers the New Home Warranty Plan Act.

If you think about it, almost every new product that you purchase comes with some kind of warranty. The same is true with newly built homes. Considering the amount of money that you will invest in a new home, having a good warranty is important. Here’s a brief description of the warranty program.

The warranty program protects deposits for new freehold homes and condominium units if the builder cannot complete the sale through no fault of your own. The deposit protection takes effect at the time you pay the deposit. Deposits for freehold homes are protected up to a maximum of $40,000 if the purchase agreement was signed on or after February 1, 2003 or up to a maximum of $20,000 if the purchase agreement was signed before February 1, 2003. Deposits for condominiums are protected up to a maximum of $20,000. Deposits in excess of $20,000 are protected by excess deposit insurance as required by the Condominium Act.

The one-year warranty requires that your home be constructed in a workmanlike manner and free from defects in materials. It must also be fit for habitation, constructed in accordance with the Ontario Building Code and free of major structural defects.

The two-year warranty covers for defects in work or materials in the electrical, mechanical plumbing and heating delivery distribution systems, water penetration through basement or foundation walls and defects in materials, including windows, doors and caulking. It also protects against major structural defects.

Finally, the seven-year warranty protects the home against major structural defects. This is defined as a defect in work or materials that results in the failure of a load-bearing part of the structure of the home as well as a defect in work or materials that materially and adversely affects the use of the building as a home. It is important to remember these dates. If you wish to make a claim, you must ensure that your claim is made within the applicable warranty period or your claim may be denied.

As with any warranty program, there are certain items that are not covered. Knowing what is not covered can be just as important as knowing what is. Many items are not covered. For instance, damage resulting from improper maintenance, damages resulting from alterations, deletions or additions made by the homeowner. Damage beyond the builder’s control such as flood, lightning, earthquake or vandalism is not covered. It should also be noted that the warranty program provides some protection against delayed closings without proper notice.

The Ontario New Home Warranty Program offers significant benefits which new homebuyers should acquaint themselves with. Understanding the benefits of the warranty program is an important part of buying your newly built home.

For more detailed information about the warranty program, visit www.tarion.com or consult with your real estate lawyer.