AZ REAL ESTATE

"All New Homes Leak" — What Tarion Actually Covers, and How Buyers Fight Back

Arthur Zhao · AZ Real Estate Partners

KEY TAKEAWAY

AZ AZ Real Estate Partners Preconstruction / Warranty

AZ Real Estate Partners

Preconstruction / Warranty

"All New Homes Leak" — What Tarion Actually Covers, and How Buyers Fight Back

Ontario new-build buyers hear it constantly: "all new homes leak." Is that overly generous to builders, or honest about construction reality? Here’s a breakdown of Tarion’s 1-2-7 year warranty and what gets covered.

Tarionnew home leakagewarrantypreconstructionOntario

Tarion at a Glance

Tarion is Ontario’s statutory new home warranty administrator. Every builder is legally required to provide a 7-year warranty on every new home. Coverage tiers: 1 year (materials and workmanship), 2 years (water penetration + electrical/plumbing/HVAC systems), 7 years (major structural defects). Maximum coverage: Freehold $400,000, Condo unit $300,000.
2026 update (According to Tarion, 2026): as of April 1, 2026, freehold buyers must register with Tarion within 45 days of signing, or risk affecting deposit protection.

Is "All New Homes Leak" Actually True?

Half-true. Ontario new builds commonly have minor first-year water issues — caulking shrinkage, paint cracking, imperfect window seals, valley roof drainage. These count as “normal break-in period” defects and the builder must fix them under warranty.

But the phrase shouldn’t excuse poor construction. Repeat leakage in the same spot, structural foundation leaks, major roof failures — these are substantive defects Tarion is required to engage on. Singtao (2024) covered a case where buyers sued a builder for $300,000 in water damage on a 4-year-old new home that now faces demolition.

Key takeaway　The first year post-closing is the golden window. Every issue must be documented on the 30-day and 1-year forms — builders don’t proactively compensate. Miss the window and the claim expires.

What Tarion 1-2-7 Year Warranty Actually Covers

Year 1: Materials & Workmanship

Dripping faucets, drafty window frames, leaking tile grout, exterior paint cracks letting water in. Any “workmanship below standard” minor leak qualifies. Must be submitted via 30-day form (first 30 days) and year-end form (before month 12) — anything not reported is deemed accepted.

Year 2: Water Penetration + Systems

Foundation/basement wall leaks, windows/doors leaking due to material defects, plumbing/electrical/HVAC failures from construction defects, exterior cladding/siding leaks. This is where most Ontario buyer water claims actually land.

Year 7: Major Structural Defects

Major Structural Defect (MSD) — anything affecting load-bearing or structural integrity. Foundation settlement causing persistent leaks, roof structure deformation, etc. Coverage runs until the day before the 7th anniversary of closing. Bar is high — needs third-party engineer assessment.

Coverage Limits

Freehold (detached/townhouse): $400,000 max per home. Condo unit: $300,000 max, with a separate common-elements pool. Damage beyond these limits requires separate litigation against the builder.

5 Steps to Enforce a Warranty Claim

Document Evidence Immediately

Day of discovery: photos + video + timestamps. Capture 6 feet around the leak point. If water staining suggests history (not just one-time), capture all evidence. Write down the discovery date.

Notify Builder in Writing

Email the builder’s warranty contact: address + leak location + discovery date + photo attachments. Verbal notification doesn’t count. Keep the email and any reply.

Submit Tarion Forms On Time

30-Day Form (within 30 days of closing), Year-End Form (before month 12), Second-Year Form (before month 24). Submit via Tarion MyHome portal. One day late forfeits the claim for that warranty period.

Tarion Inspection Phase

If builder denies or delays, Tarion sends an inspector to assess. Inspector’s report determines if it’s a warranty issue. Note: the inspector is not a neutral judge — have your own engineer’s second opinion ready as counter-evidence.

Conciliation and LAT

Builder fails Tarion direction → Conciliation. Still unresolved → License Appeal Tribunal (LAT) arbitration. LAT decisions are legally binding. Usually needs a lawyer, $5,000–$15,000 cost range.

Common Warranty Mistakes

Mistake 1: Relying on Verbal Reports

Builder site manager nods “we’ll get to it” — that’s not a warranty claim. All communication must go through Tarion forms + written email.

Mistake 2: Waiting for Builder to Reach Out

Builders have no obligation to chase buyers. Their best strategy is letting warranty windows expire. The burden is entirely on the buyer.

Mistake 3: Assuming Tarion Is on Your Side

Tarion is the warranty administrator, not a buyer advocate. Tarion inspectors may favor giving builders the benefit of doubt. Have a third-party engineer’s report ready.

Mistake 4: Skipping the 2026 Registration

As of April 1, 2026, freehold buyers must register with Tarion within 45 days of signing. Failure may cap your deposit protection. First step after putting down the deposit: register.

Arthur’s Field Recommendation

The first year after closing matters more than the next six combined. Within 7 days of move-in, do a systematic walkthrough — every ceiling, corner, window perimeter, basement. Photograph anything suspect. File a comprehensive 30-day form (over-report rather than under-report). If the builder denies, work through Tarion’s process first before hiring a lawyer — most issues resolve at the conciliation stage.

Frequently Asked Questions

Is Tarion warranty free for buyers?

Yes for buyers — the cost is built into the new home price by the builder. Tarion services (inspector, conciliation) are free for homeowners. LAT arbitration may incur lawyer fees if you choose representation.

Can I claim a leak that wasn’t caught in PDI?

Yes. PDI captures visible deficiencies. Hidden leaks (inside walls, underground, structural) discovered later remain covered under year 1 or 2 warranty. But visible defects not noted on PDI are much harder to claim afterward.

Builder repaired once and it’s leaking again — what now?

Document the "second leak" immediately. Repeat leakage at the same location is a signal of a latent defect. File a supplementary Tarion form with evidence of the prior repair attempt. Tarion engagement likelihood is high in these cases.

Does Tarion apply to resale homes?

Only if you’re the first purchaser from the builder (even if built years ago but never lived in) — warranty starts from your closing date. Standard resale (already lived in) is not covered.

Does Tarion cover damage to furniture caused by a leak?

Tarion primarily covers repair costs, not consequential losses. Furniture damage typically goes through home insurance. Builder negligence causing such losses may be pursued separately in civil litigation.

Contact the Author

Arthur Zhao

Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS

VP & Branch Manager, Bay Street Group Inc.

📞 416-888-6161🌐 arthurzhao.realtor✉️ arthurzhaorealtor@gmail.com

For informational purposes only – not legal or mortgage advice. Consult a professional for your specific situation.

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Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS

VP & Branch Manager, Bay Street Group Inc.

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"All New Homes Leak" — What Tarion Actually Covers, and How Buyers Fight Back

"All New Homes Leak" — What Tarion Actually Covers, and How Buyers Fight Back

Is "All New Homes Leak" Actually True?

What Tarion 1-2-7 Year Warranty Actually Covers

5 Steps to Enforce a Warranty Claim

Common Warranty Mistakes

Frequently Asked Questions

Arthur Zhao

Discover more from GTA Real Estate Broker | Arthur Zhao

和 Arthur 聊聊。Talk with Arthur.

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