The Ontario New Home Warranty (Tarion Warranty) Program is run by the Tarion Corporation and is mandatory for all new homes built for sale here in Ontario. If you are building a new home for yourself you do not need a Tarion Warranty. As a matter of fact, if you built a new home for sale and had enrolled in the Tarion Warranty Program and then decided to live in it yourself, the warranty would not apply. Tarion protects new home buyers by ensuring that the builder meets certain performance guidelines. It would not make sense for Tarion to protect a builder from himself/herself.
When you apply for a building permit, you will be asked if the home will be for personal use (i.e. personal residence, second home or for rent) or for sale. If it is for sale, you must enroll into the Tarion Warranty Program. The municipality will not give you a permit to build unless you do so. Anyone can build a home for themselves. In fact, it is a great way to create wealth and save money (IF you have the time, access to the right people and financial means). I’ve purchased a home from a builder and built myself. Builders have access to economies of scale so they can usually build less expensively and the emotional detachment allows them to move faster. Building for yourself usually takes longer but the final product is customized to you and you can decide on being the project manager yourself or contracting that out.
If you are building for yourself and intend to sell you should work with a Realtor who is experienced in Tarion, new homes and the special issues around selling new. You may be surprised as to the extent of the warranty you must provide.
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Another Related topic you can read: Do I Need a Realtor When Buying a New Home
Just for clarification when you advised “If you are building a new home for yourself you do not need a Tarion Warranty. As a matter of fact, if you built a new home for sale and had enrolled in the Tarion Warranty Program and then decided to live in it yourself, the warranty would not apply.”
First of all if you are building a new home with the intention of ocupying the home yourself you do not need to register as a builder nor enrol the home. However if you are building the home to sell you are required to register as a Vendor Builder and you must enrol the home upon receipt of the building permit. If you decide to occupy the home prior to selling it, it must be a bonifide occupancy. Just moving in is not sufficient There are many court decisions regarding occupancy so make sure you know what you are getting into. I always suggest you inquire at Tarion in writing with all the details of your inquiry and ask for a written response. It is not as cut and dry as you think.
Ken
I agree with what you have written, I really appreciate your adding to the discussion. I was just talking about the third case. Nothing is ever cut and dry, but please correct me if I am wrong. If your intentions before you start to build is to sell, you MUST enrol in Tarion. If your intentions before you start to build is to occupy the home or rent it out, you do not enrol in Tarion. If your intentions change after you have started to build… further investigations will be needed.
Of course, if you will want to sell the home, contacting a Realtor who has some experience in the matter as well as Tarion is a good thing.
Thanks for the great article!
It is quite informative, and offers a different insight into Tarion than the information offered on the Tarion Website.
I work with an architect here in Toronto and we have a project that is coming up to construction, and we were wondering if Tarion was required. Thus far, my inquiries and questions to Tarion have gone unanswered, and the information on their website does not specifically apply to our situation:
We have worked very closely with the current landowner, who is demolishing the existing bungalow onsite and building a new house for him and his family to live in (not for resale). The current landowner has been very involved with the process, through design, planning, and permitting stages. He is in discussions with prospective general contractors to engage them to build the house for him.
Will Tarion be required in this instance? Does the current landowner’s involvement (described above) fall into the “exercising significant control”, relating to the Owner-Built Homes warranty protection exclusion?
Is Tarion required, or applicable? If we register for Tarion and it is deemed not required, it would be a waste of money, time, and process: correct?
Thanks a lot.
Donald, Tarion is there to protect a purchaser. If you client is building the home for themselves then they do not need a New Home Warranty (Tarion Warranty).
Hi Steven: If you contract the build out to someone else, the person or company that is contracted to build the home must be registered and the home must be enrolled. Of course the contract itself will spell out what the contractor will supply in material and labour vs what the home owner supplies. Remember as well what the contract says and what gets built may change during the build, so the requirement to register and enrol may change. Read the definitions of Builder and Vendor in the Ontario New Home Warranties Plan Act… Sorry for the late reply.
JD I would disagree but you can contact Tarion and verify this for yourself. As per the act ““vendor” means a person who sells on his, her or its own behalf a home not previously occupied to an owner and includes a builder who constructs a home under a contract with the owner” So, regardless of who was the builder, the Ontario New Home Warranties Plan Act is there to protect a purchaser. No “Sale”, no buyer to protect. If you Occupy the home before you sell… no buyer protection, it is a regular re-sale home. As I wrote, the act isn’t there to protect people from them selves. It is there to protect Buyers of new construction and ensure that the builders meet minimum standards. Buying a home that was built and not covered by the warranty should be done with great care. Trying to sell a home that should have been registered can lead to fines. As always, work with a pro when dealing in these situations.
How long do you have to live in a house before you could sell? What if you had to move for some reason
I would like to add the following related question: I build some townhomes for the purpose of renting and, as such, they are not registered with Tarion. I have trouble getting my expected rental rate so the units remain un-occupied. I then decide to sell the units. One unit is sold to an investor who rents it out, and one unit is sold to and en user who moves in. Q: What are the Tarion registration and warranty implications?
I would suspect that in order to get your building permits you signed a document that said the units were not for sale. This has now changed so the most correct answer should be that, prior to your selling the unit, you should contact Tarion directly. They may require you to enroll the unit into the program, which can be issue if you don’t have all the B19 inspections in place for example. The investor could claim that the unit should be covered under the warranty. If Tarion gets involved you could be charged, forced to pay to enroll the unit and provide a warranty. To protect yourself the most you should contact Tarion prior to selling OR rent it out for a short period of time before selling.