Tarion Warranty

What is the Tarion Warranty?

The Tarion Warranty is the statutory new-home warranty every Ontario homebuilder must provide to a buyer of a freshly-built freehold home, condominium, or pre-construction unit. Coverage is funded by builder enrolment fees and is administered by Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act. Coverage is automatic, builder-provided, and lasts up to seven years depending on the type of defect.

What's covered, and for how long

Tarion coverage runs in tiers, each with its own scope and duration:

• Deposit protection during the pre-closing period, capped at $100,000 for freehold homes and $20,000 for condominium units (2024 amounts).
• One-year warranty covering defects in work and materials, breach of the Ontario Building Code, and unauthorized substitutions.
• Two-year warranty covering water penetration, defects in plumbing, electrical and heating systems, exterior cladding, and defective windows and doors.
• Seven-year major structural defect warranty covering load-bearing portions of the home that fail or pose a serious health and safety risk.

Caps on the total payout vary by home type. Freehold homes are typically capped at $400,000; condominium units at $50,000 with separate common-element coverage. The exact figures, current as of 2024, are published by Tarion and are exam-tested.

Where this appears in your Humber program

Tarion's role appears most prominently in Course 3: Additional Residential Real Estate Transactions, which covers new-construction agreements, deposit protection, and pre-delivery inspections. Brokers representing buyers of pre-construction homes are responsible for explaining Tarion coverage to clients and ensuring the buyer's deposit is properly protected before closing.

How Tarion differs from the HCRA

Tarion is the warranty provider. The Home Construction Regulatory Authority (HCRA), created in 2021, is the licensing regulator for builders and vendors. Together they replaced Tarion's pre-2021 dual role of warranty provider and licensor. On the exam: Tarion handles claims and coverage; HCRA licenses and disciplines builders.

A typical scenario

A buyer takes possession of a new freehold home in Mississauga. Six weeks after closing, water enters the basement during a storm. The buyer documents the issue, files a Year One warranty form with Tarion within the first 30-day window after the anniversary of possession, and submits photos and contractor reports. Because water penetration falls under the two-year warranty, Tarion has authority to compel the builder to repair, or to step in directly if the builder fails to act within the prescribed timelines.

If the builder ignores the claim, the buyer escalates to a Tarion conciliation, which produces a binding determination. The buyer can also file a complaint about the builder's conduct with the HCRA, which is a separate process that can affect the builder's licence.

Buyer disclosure obligations for the registrant

A registrant representing the buyer of a new build is expected to:

• Confirm the home is enrolled with Tarion before any deposit changes hands.
• Explain the deposit protection limits in writing as part of pre-closing advice.
• Recommend the buyer attend the Pre-Delivery Inspection (PDI) and document any deficiencies in the PDI form, since a PDI is the buyer's single best opportunity to capture deficiencies covered by the one-year warranty.

Frequently asked questions

What is covered by the Tarion warranty?

The Tarion warranty covers deposit protection during the pre-closing period (capped at $100,000 for freehold and $20,000 for condos), a one-year warranty on workmanship and materials, a two-year warranty on water penetration and major systems (plumbing, electrical, HVAC, exterior cladding, windows and doors), and a seven-year major structural defect warranty on load-bearing components. Total payouts are capped by home type — typically $400,000 for freehold homes.

How long does the Tarion warranty last?

The Tarion warranty has tiered coverage that lasts up to seven years from the date of possession. The one-year warranty covers basic defects, the two-year warranty covers water penetration and core mechanical systems, and the seven-year major structural defect warranty is the longest tier. Each tier has its own claim deadlines — Year One claims must be filed within 30 days of the first anniversary of possession.

Is the Tarion warranty mandatory in Ontario?

Yes. Every new home built for sale in Ontario must be enrolled with Tarion under the Ontario New Home Warranties Plan Act. Builders must register with the Home Construction Regulatory Authority (HCRA) and enrol every home they build. A buyer who pays a deposit on an unenrolled home is buying outside the program, which forfeits all Tarion protections — a serious red flag. Registrants should always confirm enrolment before any deposit changes hands.

Does Tarion cover foundation cracks?

Tarion covers foundation cracks only if they qualify as a Major Structural Defect (MSD) under the seven-year warranty. The MSD definition requires the crack to materially affect the home's structural integrity, cause water penetration, or pose a serious health and safety risk. Hairline cosmetic cracks typically do not qualify. Buyers who suspect a structural foundation issue should document it, file a Year-One or two-year warranty form depending on the timeline, and request Tarion review.

Practice this topic

Tarion warranty rules are tested on every Course 3 exam and frequently appear in simulation papers. ExamAce includes practice questions on deposit limits, claim windows, and the difference between Tarion and HCRA in the Course 3 question bank.