The Tarion New Home Warranty in Ontario: The 1-, 2-, and 7-Year Coverage Explained
Every new home and pre-construction condo in Ontario comes with a built-in warranty — here’s what each tier covers, what your deposit is protected for, and how delay compensation works.
What is the Tarion new home warranty in Ontario, and what does it cover?
Tarion is Ontario’s statutory administrator of the new home warranty, which is mandatory on virtually every newly built home in the province, including pre-construction condos. According to Tarion, post-possession coverage comes in three tiers — 1, 2, and 7 years: the 1-year covers defects in work and materials, Building Code violations, and fitness for habitation; the 2-year adds water penetration and electrical/plumbing/heating defects; the 7-year covers major structural defects. Before possession, it also protects your deposit and pays delayed-closing compensation.
Source: Tarion (tarion.com, 2025)
As a GTA broker, I’ve walked plenty of clients through pre-construction condos and brand-new builds, and nearly every new-home buyer asks me the same thing: “If the home leaks, cracks, or the builder keeps pushing back closing — what actually protects me?” The answer is Tarion, Ontario’s statutory new home warranty. It isn’t an optional add-on; it comes built into virtually every newly built home in the province. Here’s how the three coverage tiers work, what your deposit is protected for, how delayed closing is compensated, and the two forms you must not miss.
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First, what Tarion is — and who regulates the builder
According to Tarion, Tarion is the body established under Ontario law to administer the province’s new home warranty program, and nearly every newly built home (detached, town, and pre-construction condo) is enrolled in it by law. One important distinction: since 2021, licensing the builder and administering the warranty are two separate jobs. The licensing and conduct of builders and vendors is now handled by the Home Construction Regulatory Authority (HCRA), while the warranty coverage and claims are administered by Tarion (Tarion, tarion.com, 2025; HCRA, hcraontario.ca, 2025). Before you buy, check your builder in the HCRA’s Ontario Builder Directory to confirm the licence and see any history.
Tier one: the 1-year warranty — the broadest coverage
• is built in a workmanlike manner and free from defects in material
• does not violate the Ontario Building Code
• is fit for habitation
• contains no unauthorized substitutions (e.g., swapping agreed-upon materials for inferior ones)
This coverage stays with the home even if you sell it within the year. Because the 1-year warranty is the most comprehensive, it’s also the easiest to under-use — document every issue you find during the first year.
Tier two: the 2-year warranty — water and key systems
• Water penetration through the basement or foundation walls, and defects that let water into the building envelope
• Defects in work and materials in the electrical, plumbing, and heating delivery and distribution systems
• Defects in the exterior cladding (brickwork, siding, etc.)
• Ontario Building Code violations that affect health and safety
In short, the classic “it leaks, and something’s wrong with the plumbing/heating/electrical” problems of a new build’s first two years live in this tier.
ℹ️All three tiers start from your possession (move-in) date — not the date you signed or paid your deposit. The 1-, 2-, and 7-year clocks all run forward from possession.
💡 According to Tarion, the seven years from possession cover a Major Structural Defect (MSD). Tarion defines an MSD as a defect in work or materials that: (i) results in the failure of a load-bearing structural element of the building; (ii) materially and adversely affects a load-bearing element’s ability to carry, bear, and resist the loads it should over its ordinary service life; or (iii) materially and adversely affects the use of a significant portion of the building for ordinary residential purposes. Typical examples include major damage from soil movement, significant cracks in foundation walls, and roof-structure collapse or distortion. Note: the 7-year tier is for major structure — not every defect. Hairline cracks or peeling paint don’t qualify here.
Protection before possession: your deposit
Builder dragging out closing? Delayed-closing compensation
🚨The warranty does not pay out automatically. Miss the 30-Day or Year-End Form deadline and you can lose the right to claim items that would otherwise have been covered. The Year-End Form is especially critical — it’s your last chance to report items under the comprehensive 1-year warranty.
The two forms that make or break your claim: 30-Day and Year-End
• 30-Day Form: submitted within your first 30 days of possession, listing items left unresolved at your Pre-Delivery Inspection plus anything new that has appeared. You can file it only once, so include everything.
• Year-End Form: submitted during the last 30 days of your first year of possession, listing all outstanding items to date. This is your final opportunity to report items covered by the comprehensive 1-year warranty.
The easiest way to file and manage claims is through Tarion’s MyHome online portal.
Tarion is a warranty, not an inspection: what it doesn’t cover
Tarion is a warranty, not a reason to skip a proper inspection or a lawyer’s review of your agreement. It does not cover: damage you cause after you move in, normal wear and tear, resale homes (Tarion covers new builds only), or design choices the builder delivered as promised that you simply dislike. It also doesn’t replace your Pre-Delivery Inspection (PDI) — the PDI is where you document issues item-by-item and feed them into your 30-Day Form. My advice: do the PDI thoroughly, file the forms on time, and keep every communication in writing. That’s how you actually collect on this “built-in insurance.”
Frequently Asked Questions
Do I have to buy the Tarion warranty separately?
No. According to Tarion, virtually every newly built home in Ontario (including pre-construction condos) is enrolled by law — the warranty comes with the home and you don’t purchase it separately. What you do have to do is confirm the builder is HCRA-licensed and file your warranty forms on time.
What does each of the 1-, 2-, and 7-year warranties cover?
According to Tarion, the 1-year is broadest: workmanship, material defects, Ontario Building Code violations, and fitness for habitation. The 2-year adds water penetration (basement/foundation/envelope), electrical, plumbing, and heating system defects, exterior cladding, and health-and-safety Code violations. The 7-year covers only Major Structural Defects (MSD) — such as failure of a load-bearing element, major foundation-wall cracks, or roof-structure collapse.
If the builder cancels the project or goes bankrupt, is my deposit protected?
Within limits, yes. According to Tarion, freehold deposit protection is up to $60,000 for homes priced at $600,000 or less, and up to 10% of the price to a maximum of $100,000 for homes over $600,000. For condominium units, deposit protection is up to $20,000 plus limited accrued interest — the backstop when a builder won’t return your deposit.
The builder keeps delaying my closing — can I claim compensation?
Yes. According to Tarion, if the builder misses the agreed firm closing/occupancy date, you may claim up to $7,500 in delay compensation, including $150 per day for living expenses. Changing a closing date requires at least 90 days’ written notice; if notice is inadequate, you’re entitled to $1,500 in compensation.
What’s the difference between Tarion and the HCRA?
Since 2021 the roles are split. The HCRA (Home Construction Regulatory Authority) licenses builders and vendors, regulates their conduct, and maintains the Ontario Builder Directory. Tarion administers and pays out the new home warranty. Before buying, check the builder in the HCRA directory for the licence and any history, then rely on Tarion for the coverage itself.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · GUILD Elite
VP & Branch Manager, Bay Street Group Inc.
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