The Tarion New-Home Warranty Explained: What the 1-, 2-, and 7-Year Coverage Covers
On a new build or pre-construction unit, the Tarion warranty is your most important layer of protection — and the one fewest buyers actually read.
What does Ontario’s Tarion new-home warranty cover?
New homes in Ontario come with a statutory Tarion warranty: after possession it splits into 1-year, 2-year, and 7-year coverage, plus pre-possession deposit and delayed-closing protection. In short: year 1 covers most defects and workmanship; year 2 covers water penetration, electrical, plumbing and other systems; year 7 covers major structural defects. Before possession, freehold deposit protection is tied to the sale price, while condo deposits are held in trust under the Condominium Act with additional coverage. Builders themselves are licensed by the HCRA.
Source: Tarion.com and the Home Construction Regulatory Authority (HCRA)
When you buy a new home or pre-construction unit in Ontario, the Tarion warranty is a layer of protection that comes with it by law — yet many buyers don’t read it until something goes wrong. This article lays out the structure: what’s protected before possession, what the 1-, 2-, and 7-year periods cover after possession, and how much deposit protection you have, so you go into signing and inspection informed.
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Before possession: deposit and delayed closing
ℹ️The warranty requires you to submit claims. Tarion coverage doesn’t pay out automatically — you must file warranty forms within set windows (such as 30 days after possession and at the end of year one). Missing a window can affect a claim, so watch the deadlines after you take possession.
Year 1 after possession: workmanship and materials
Year 2 after possession: systems and water
Year 7 after possession: major structural defects
Coverage caps and who licenses the builder
Per Tarion, for freehold homes with agreements signed on or after July 1, 2023, the maximum statutory coverage is $400,000; for condo units it is $300,000. Also, keep two bodies distinct: Tarion handles warranty claims, while the HCRA licenses and regulates builders. Before buying new, confirm the builder holds a valid licence.
Pre-Construction Buying Guide →Ontario Home Buying Guide →The Ontario Selling Blueprint →
Frequently Asked Questions
Do I have to buy the Tarion warranty separately?
No separate purchase. It is a statutory warranty that comes with new homes in Ontario, provided by the licensed builder through the Tarion system. Your job is to understand the coverage and report issues within the windows.
Does a resale home have Tarion warranty?
If the home is still within its 1/2/7-year periods, the remaining warranty generally transfers to the next owner. Older homes past the periods no longer have Tarion coverage. Before buying a near-new resale, you can confirm the remaining years.
Is deposit protection the same for condos and freehold?
No. Freehold deposit protection is tied to the sale price (the $600,000 threshold, up to $60,000 or $100,000); pre-construction condo deposits are held in trust under the Condominium Act, with a further $20,000 of protection. Different mechanisms.
What’s the difference between Tarion and HCRA?
Tarion handles new-home warranty claims and service; the HCRA (Home Construction Regulatory Authority) licenses and regulates builders and vendors. One protects the home, the other oversees the builder.
Arthur Zhao
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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