Ontario Home Warranty

By Published On: December 16, 2017Categories: Articles, Real Estate4.8 min read

The Ontario New Home Warranty Program

It is against the law in Ontario to build and sell new homes without being registered with the Ontario New Home Warranty Program.  This includes builders and sellers and also their trustees, mortgagees, receivers, and liquidators.  The home must be enrolled before construction commences.  The Act does not cover dwellings for temporary or seasonal occupancy or condo conversions.  This article gives an overview of coverage for Agreements signed after Ocotber 1 2012.

Total coverage for single family homes and condominiums is $300,000.  The common elements of a condominium project are warranted to a maximum of the lesser of $50,000 times the number of units and $2.5 million.  There is a maximum of $15,000 for warranted damage caused by environmentally harmful substances or hazards and a maximum of $25,000 for coverage of septic systems.

The ONHWP is paid for by fees the builders and vendors pay to register, and the fees they pay to enrol all new homes for sale.  This latter fee is ultimately paid by the purchaser of a new home.

DEPOSITS up to a maximum of $20,000 for condos and up to a maximum of $40,000 for all other new homes are covered in case the builder will not or cannot complete the sale through no fault of the purchaser.  Another consideration for purchasers is that payments for upgrades and extras will often not be refunded in accordance with the terms of the Agreement.

Should you already own the land and you have hired a builder to construct a home (a CONTRACT HOME), there is no deposit coverage, rather there is protection against financial loss should the builder fail to complete the house.

The vendor must give the purchaser a CERTIFICATE OF COMPLETION AND POSSESSION.  Both the builder and the purchaser sign the Certificate and the purchaser gets a copy.  The purchaser should inspect the property and list any defects on the Certificate before signing it.  The ONHWP then issues a Warranty Certificate to the purchaser.

Every builder must warrant that the home is free from DEFECTS in workmanship and material, is fit to live in, and meets the Ontario Building Code.  The builder must correct any defects in workmanship or material for one year from the date of possession.  It is the purchaser’s responsibility to notify the builder in writing, before the end of the first year.  If the builder does not respond within a reasonable time, the purchaser must write to the Warranty Program about the defects, also within the one-year warranty period.  The Program does not cover secondary damage i.e., personal or property damage, caused by defects that are warranted.  There are other exclusions listed in the Act.

The builder must warrant the home against: WATER PENETRATION through the basement or foundation; defects in materials and work including caulking, windows, and doors such that the building envelope prevents water penetration; defects in materials and work in the electrical, plumbing and heating delivery and distribution systems; defects in materials and work which result in the detachment, displacement, or deterioration of exterior cladding; and violations of the Ontario Building Code’s health and safety provisions for TWO YEARS.

There is protection from MAJOR STRUCTURAL DEFECTS for a period of seven years from the date of possession.  This encompasses any defect that results in the failure of a load bearing part of the house’s structure, or anything that adversely affects the use of a significant portion of the building including significant damage due to soil movement, major cracks in the basement walls, collapse or distortion of joints or of the roof, or chemical breakdown of materials.

Your Agreement contains provisions regarding DELAYS in closing.  For single-family homes, if you have a firm closing date that is delayed, your builder must compensate you to a maximum of $7500 plus HST for reasonable costs, for example, costs for moving and storage, and costs for additional living expenses up to $150 per day.  If you do not have a firm closing date, your builder is allowed to extend closing twice, by up to 120 days each time.  If the home is not completed by 365 days after these extensions, the purchaser has 30 days to terminate the deal.

In the case of a contract home, the delayed closing compensation provisions have no application as there is no transfer of title.

Purchasers are not entitled to compensation if the delay is due to natural disasters, civil insurrections, acts of terrorism or pandemic, fires, or strikes.

If the Agreement specifies that the purchaser has the right to select certain items of construction or finishing, such as colours and styles, the builder may not substitute these things without the purchaser’s consent.  If the Agreement provides for an item, but does not give a right of selection, any SUBSTITUTION the builder makes must be of equal or greater value.

The warranty stays with the home regardless of a change in ownership.  If the Warranty Certificate is lost, a new one may be obtained from the ONHWP.  The purchaser of a new home can determine how much warranty coverage remains by calling the ONHWP with the enrolment number of the home.

The Act and Regulations are available online.  ONHWP has information on the program and ratings of the after-sales service record of builders.

The comments contained in this article provide a brief overview only and should not be regarded or relied upon as legal advice or opinion.  The lawyers at M. G. Michaels & Associates would be pleased to provide more information or specific advice on matters of interest to readers.

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