Ontario’s Tarion New Home Warranty: What 1, 2, and 7-Year Coverage Means

Tarion is the body that administers Ontario’s statutory new home warranty. According to Tarion, every newly built freehold home and every new condominium unit in the province comes with this warranty by law — you don’t have to purchase it, and the builder is obligated to enrol the home before you close. If what you’re buying is new construction, the coverage is already attached to your home.

The protection works in two phases: before you close (deposit protection and delay compensation) and after you move in (the 1-, 2-, and 7-year tiers). Let’s take them in order.

The Three Tiers: What 1, 2, and 7 Years Each Cover

According to Tarion, all three periods start on the date you take possession of the home:

• 1-year warranty: covers defects in workmanship and materials (unfinished work, improper installation, and similar). This is the broadest tier and the one most homeowners use.
• 2-year warranty: covers water penetration, defects in the electrical, plumbing and heating delivery and distribution systems, and certain Ontario Building Code violations affecting health and safety.
• 7-year warranty: covers major structural defects (MSDs) only — structural problems that affect the home’s load-bearing capacity or its use.

There are also maximum payout limits. According to Tarion, for purchase agreements signed on or after July 1, 2023, the statutory warranty covers freehold homes up to $400,000 and condominium units up to $300,000 (the exact cap depends on when the agreement was signed).

Deposit Protection and Delayed Closing/Occupancy Pay

Deposit protection (if the builder fails or the project is cancelled): According to Tarion, for freehold homes priced at $600,000 or less, the deposit is protected up to $60,000; for homes over $600,000, protection equals 10% of the purchase price, to a maximum of $100,000. For condominium units, on top of the trust protections under the Condominium Act, Tarion provides deposit protection of up to $20,000 (plus a limited amount of accrued interest).

Delayed closing/occupancy compensation: According to Tarion, if the builder delays, living expenses are paid at $150 per day, up to a maximum of $7,500. If the builder fails to give 10 days’ notice of the delay, you receive a fixed $1,500 ($150 × 10 days). Moving and storage costs are reimbursable with receipts, within the same $7,500 cap.

According to Tarion, the warranty does not cover: normal wear and tear; secondary damage you allowed to develop (e.g. mould from a minor leak you didn’t report); damage caused by you or third parties; problems from your own alterations or additions; appliances (covered by the manufacturer); and damage from failing to maintain the home properly. The action that matters: report issues to Tarion within the correct warranty window using the statutory forms — miss the window and an otherwise-covered item can lapse.

The Statutory Forms: Don’t Miss the 30-Day and Year-End Windows

During the first-year warranty, Tarion gives you set windows to report:

• 30-Day / Initial Form: your first window after move-in, used to report the issues you find in the opening weeks of living in the home.
• Year-End Form: running from roughly the six-month mark (day 183) to day 365, this is your final chance to report items covered by the one-year warranty.

After that come the Second-Year Form (submittable any time in your second year, multiple times) and the Major Structural Defect Form (after year two, up to seven years from possession). All forms are filed through Tarion’s MyHome online portal — keep photos and records.

Many buyers assume Tarion both runs the warranty and vets the builder — but since February 1, 2021, those two jobs sit with two different bodies. According to the HCRA and Tarion, Ontario created the Home Construction Regulatory Authority (HCRA) under the New Home Construction Licensing Act, 2017. The HCRA licenses every company and person building or selling new homes, checks competence, financial responsibility and conduct, handles complaints, maintains the public Ontario Builder Directory, and disciplines licensees (fines, conditions, or revocation).

With that split, Tarion now focuses solely on the warranty — coverage, deposit protection, and dispute resolution. For buyers that means two steps: before you buy, check the builder’s licence and record in the HCRA’s Ontario Builder Directory; after you close, take home defects to Tarion.

Q: Does every new home in Ontario come with a Tarion warranty?

Yes. According to Tarion, every new freehold home and new condominium unit built in Ontario is automatically covered by a statutory new home warranty administered by Tarion. It is mandatory, you do not buy it separately, and the builder is required to enrol the home for warranty before closing.

Q: What do the 1, 2, and 7-year Tarion warranties each cover?

According to Tarion: the 1-year warranty covers defects in workmanship and materials; the 2-year warranty covers water penetration, defects in the electrical, plumbing and heating delivery and distribution systems, and certain Ontario Building Code violations affecting health and safety; the 7-year warranty covers major structural defects. All three start on your possession date.

Q: What happens if my builder delays closing or occupancy?

According to Tarion, delayed closing/occupancy compensation is $150 per day for living expenses up to a maximum of $7,500. If your builder fails to give you 10 days’ notice of the delay, you receive a fixed $1,500 ($150 x 10 days). Moving and storage costs are reimbursable with receipts, within the $7,500 cap.

Q: What’s the difference between Tarion and the HCRA?

Effective February 1, 2021, Ontario split builder licensing from warranty administration. The HCRA (Home Construction Regulatory Authority) licenses and regulates builders and vendors under the New Home Construction Licensing Act, 2017, and maintains the public Ontario Builder Directory. Tarion now focuses solely on administering the warranty, deposit protection, and dispute resolution.