Thinking of buying a new home? You now need to register — or your warranty coverage could be reduced

Here’s what you need to know:

What’s the change?

In the past buyers did not need to register.

Registering is free and can be done online, using a tool that Tarion has created. 

“Buyers who don’t notify Tarion will still receive coverage through a special fund that protects unregistered deposits,” said Tarion spokesperson Andrew Donnachie in an email.

“It’s important to be clear that in all cases, consumers will continue to receive deposit coverage and the full construction warranty coverage against defects in their new home.”

Why was this change made? 

Donnachie said Ontario is the only place in Canada where homebuyers qualify for deposit coverage even if the builder is not legal. 

“Over the past few years, this approach has been undermined by an increase in illegal building and fraudulent actors taking deposits,” he said. These “bad actors” don’t report themselves to Tarion and take advantage of buyers. 

“By connecting deposit coverage to registering with Tarion, we fix a number of these problems,” Donnachie added. 

Tarion can verify if a builder is licensed after homebuyers register. If they aren’t, Tarion can alert the Home Construction Regulatory Authority (HCRA) and intervene, he said. “As a result, illegal builders will be less likely to try to take deposits from consumers knowing that Tarion will be notified.”

The agency will also be able to reach out to homebuyers directly and make sure they are aware of their rights, Donnachie added. 

What happens if home buyers fail to register? 

“Buyers who don’t notify Tarion will still receive coverage through a special fund that protects unregistered deposits, Donnachie said.

They will still be protected but the fund will have an annual cap. Tarion anticipates that will be $15 million per year to start, with an annual review to determine if that’s enough, he said. 

Tarion set this cap by looking at the amount paid out to buyers in deposit claims where the builder was illegal, which is on average $1 million, or 30 buyers per year, Donnachie added.

If the claims in the special fund exceed the yearly cap, buyers would take a proportionate cut to their compensation, according to Tarion’s website. 

”For example, if 110 purchasers submit claims for $100,000 in a year, then the total deposit claims under the sub-limit for that year are $11 Million. Therefore, these purchasers, who did not provide proper notice, would then receive up to $90,909 in coverage each,” the website says.

In 2024, Tarion doled out a record amount of compensation, to more than a thousand homeowners who lost deposits due to builder receiverships, at almost $80 million, according to its annual report.

The registration will not impact any other aspect of warranty claims, Donnachie added. The changes have the support of the Consumers Council of Canada and the Ontario Real Estate Association (OREA).

But not everyone agrees.

NDP MPP Tom Rakocevic, who is the critic for Public and Business Service Delivery, Procurement and Auto Insurance Reform, said the change is a bad idea.

“Tarion has now put the onus on people to register with Tarion. Before it was an automatic thing a builder was required to do so,” he said.

“I do not buy this rationale. I fought against it. I argued against it,” he added.

“They’re laying this at the feet of people. But many people don’t even know what Tarion is. They have no idea how the warranties work.”

New homebuyer Marie-Josée d’Amours, who’s case was featured in a Toronto Star article from 2024, said it took a long battle with Tarion to get compensation for the many defects her townhouse had.

The upcoming changes are “something else on the shoulders of homeowners,” she said.

“If it’s not something that’s done automatically, when you sign the paper, when you purchase, in the contract, people won’t know,” she said.   

Donnachie said they recognize that public awareness of the changes is important and have invested in paid advertising on the topic.

“We have partnered with real estate lawyers, realtors, mortgage professionals and others in the industry to help us get the message to the public and help their clients,” he added.