AZ Real Estate Partners
"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.
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.
What Tarion 1-2-7 Year Warranty Actually Covers
5 Steps to Enforce a Warranty Claim
Common Warranty Mistakes
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 · GUILD Elite
VP & Branch Manager, Bay Street Group Inc.
For informational purposes only – not legal or mortgage advice. Consult a professional for your specific situation.
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