Tarion New Home Warranty Changes

The Tarion Warranty Corporation, if you are unfamiliar with it, is the private corporation set up in 1976 to provide warranties on numerous new build properties as well as regulate the builders of these new homes. It represents over two million homes and aims to regulate the builders of new build properties.

According to Tarion, their mandate is to investigate homeowner warranty claims, provide deposit and delayed closing protection for new homeowners, resolve warranty disputes as well as ensure that builders are reaching the Province-wide technical standards of building. They also set out to help prosecute illegal builders. 

It is no secret that there has been some scathing criticism directed towards the Tarion Warranty Corporation within the last few years. Professionals in the mortgage and real estate fields, as well as consumers, have felt that the corporation has not performed its function properly in several ways and voiced concerns over the disproportionate number of individuals that sit on the board as leaning heavily in favor of the builders rather than protecting the consumer and homeowners. Several cracks in the system have come to light. Due to increased pressure from real estate professionals and homeowners enrolled in the program the Ministry of Government and Consumer Services has outlined proposed changes to the corporation moving forward.

 

Proposed Government Changes to Tarion

  • Paramount of the changes that would directly address the immediate criticism of favoring the builders over the homeowners is to separate the regulatory function of the builders from the administration of warranties under Tarion. This would be achieved by creating a separate regulator. This would help to eliminate the tendency to favor the builders when providing warranties and dealing with customer complaints. Tarion has been advised to work with the Home Construction Regulatory Authority to help develop this independent regulator.

  • The Ontario Provincial Government has also announced an analysis of a multi-provider insurance model for new home warranties to determine if this model would be applicable to Ontario and have the means to implement such a model. The analysis will include discussing this approach with Government partners, Tarion, and those in the insurance and new home building sector.

 

Tarion’s Initial Response

In response to these proposed changes, Tarion announced in November 2019 that they would start taking into consideration some of the Government’s recommendations. Tarion has said it will enforce Pre-Delivery Inspections to improve the quality of new homes in Ontario.

As well, in response to such scathing criticism and government suggestions for change, Tarion announced that they will be making improvements to Tarion’s dispute resolution tools. They have also promised to take steps to increase disclosure on the Ontario Building Directory.

 

Will these changes be implemented?

Obviously time will tell. There still is plenty of time for Tarion to stand true to its promises of restructuring and to implement Government suggestions for improvement. Many real estates, mortgage, and insurance professionals, however, are not convinced that the Ontario Government’s suggestion will affect much with the corporation’s practices and furthermore are skeptical that the promises that Tarion has made in response will truly take effect as well. One thing is for certain, Ontario homeowners need further protections put in place. There also needs to be less favored of the builders and more consideration for homeowners’ concerns.

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