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Building Warranty: What You Need To Know

Warranty: An Overview

When we as consumers are buying things in day to day life our decisions can be swayed if a warranty is offered (and what is covered and for how long). Most people don’t think of warranty when it comes to real estate, however, if you are buying new, chances are you will be purchasing a home that has warranty up to 7 years.

If you are buying new you should always check to make sure that your home comes with warranty, as this means the builder you are buying from has registered with the Canadian Home Builder’s Association. This ensures you are purchasing a home constructed from a legitimate builder, which can add peace of mind with the purchase.

It is smart for builders to become licensed and join this association as it not only shows legitimacy for their company, it also allows them to sell their homes to purchasers with a high ratio mortgage. In order for mortgage insurance companies like CMHC to give out these high ratio mortgages (less than 20% down payment) they require the builders to be licensed.

What is Covered?

Coverage varies depending on the length of time you have occupied the house for, but the main purpose of the warranty is to protect from construction defects of the home. The first phase of the warranty covers issues that typically occur in the first year post-construction such as workmanship issues. The second phase covers water in the basement, electrical, or plumbing issues and the third phase covers the more serious structural defects. Tarion home warranty is often used around Southwestern Ontario and their typical warranty is outlined below.

1. One year from possession of the home

  • Requires construction to be of quality workmanship and free from material defects
  • Protects against the builder substituting materials and or finishes that were not authorized
  • Protects against the home being against the Ontario Building Code and unfit for habitation

2. Two years from possession of the home

  • Protects against water coming into the basement or foundation as well as defects in windows, doors, or caulking that were a result of this water penetration
  • Protects against defects in electrical, plumbing, heating, as well as detachment of exterior cladding such as siding or brick

3. Seven years from possession of the home

  • Protects against major structural defects in the building such as a crack, distortion or displacement of a load-bearing element of the building if it results in a load bearing failure, adversely affects the ability of the structure to perform its duty of bearing a load, or adversely affects a significant portion of the building for its ordinary purposes

What isn’t Covered?

Certain things (that you may not be extremely pleased about if they arise) will not be covered. Houses do tend to settle after they have been built which could result in hairline cracks and these are not covered by the warranty. Normal blemishes, faded paint, and any appliances are normally not covered either. All builders have a right to dispute warranty claims as well so it is important to read and understand your warranty package before completing your purchase. The maximum coverage for freehold homes and condominium units is $300,000 so any defects over that amount will not be covered either.

Source – Tarion.com

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