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Time to Change Tarion and the Ontario New Home Warranties Plan Act?

4 minute read

This article was first published in the 2016 spring issue of Condominium Manager, a publication of the Association of Condominium Managers of Ontario.

On November 5, 2015, David Orazietti, Ontario's Minister of Government and Consumer Services, announced an independent review of the Ontario New Home Warranties Plan Act and the Tarion Warranty Corporation.

The review, conducted by The Hon. J. Douglas Cunningham, former Associate Chief Justice of the Ontario Superior Court of Justice, will focus on ways to improve consumer protection, accountability, transparency and the governance of the Tarion Warranty Corporation. Justice Cunningham served on the Ontario Superior Court from 1991 until his retirement on September 30, 2012.

Tarion is responsible for administering the Ontario New Home Warranties Plan Act, which was passed in 1976. The Act provides new home warranty protections and regulates the construction and sale of new residential dwellings in Ontario. Except in a limited number of cases, new homes built for resale or under contract with an owner must be enrolled in the warranty program, and builders must be registered with Tarion.

365,392 homes in Ontario were under warranty at the end of 2014. 49,890 new homes were enrolled in that year, built by Tarion's 5,400 registered builders. Of those new homes, 19,087 (38.3%) were condominium units.

In 2014, Tarion paid out 419 claims totalling almost $9.9 million.

Tarion recently implemented a number of changes, including enhancing warranty coverage and improving enforcement against illegal building. The Protecting Condominium Owners Act, 2015, brings further changes by providing some coverage for residential condominium conversion projects. As part of the Protecting Condominium Owners Act, 2015, the Ontario New Home Warranties Plan Act will be amended so that most of the warranty protections available to buyers of new condominium units will also apply to certain condominium conversion projects. The warranties will not apply to the pre-existing elements of a condominium conversion, meaning that no warranty will be provided to ensure pre-conversion building elements have been constructed in a “workmanlike manner” and are free from defects. All other statutory warranties will apply.

Condominium conversions are not currently protected by the statutory warranty plan. With a growing number of condominium projects involving the conversion of an existing building, whether previously residential or otherwise, the Province was concerned that purchasers of units received no statutory warranty coverage even if significant new construction was required to complete the conversion to condominium units.

The current review will assess best practices in the area of new home warranties, examining Ontario's current scheme and comparing it to those in other jurisdictions. Justice Cunningham will also consult consumers, the home building industry, the municipal sector and others as appropriate, to assist him with preparing recommendations that will enhance Tarion and the entire warranty program.

Although the review will provide recommendations related to accountability, transparency and board governance, the main focus appears to be on improving consumer protection. It is expected that the report may comment on topics including the claim submission process, repair timelines, the dispute resolution process, warranty coverage levels and duration, and the homeowner's onus to prove defects.

This approach is consistent with other reviewed recently conducted by the province, including the recent review of the Condominium Act, 1998.

Justice Cunningham will be holding public consultations in early 2016. He intends to provide a draft report to the Minister by May 31, 2016, with a final report with recommendations being submitted prior to June 30, 2016.

I know of many situations where home buyers and condominium corporations were successful in pursuing a warranty claim with Tarion. I also know of many other situations where home buyers and condominium corporations were not successful, for many different reasons. No matter your personal experience, this review has the potential of having a significant impact on Ontario's home buyers, builders and condominium corporations.

I encourage everyone to provide comments on the Ontario New Home Warranties Plan Act and the Tarion Warranty Corporation by participating in this review. You can do so by emailing your thoughts and submissions to TarionReview@ontario.ca.

Matthew Wilson, a lawyer at the London, Ontario office of Lerners LLP, represents condominium corporations, property managers, developers and home buyers throughout Ontario. An active member of the local community, he was named one of London's 20 Under 40 for 2013. Matthew can be reached at mwilson@lerners.ca or 519-640-6357.

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