Blog March 22, 2021

Know Your Rights Before Building a Home in Ontario

Custom home builders in Ontario are required to provide a 7-year statutory warranty on all the homes they build. The warranty coverage includes:

Protection on deposits
Protection against financial loss for the contract homes
Compensation for delays in occupancy or closing
Protection against unauthorized substitutions
One- and two-year warranties for defects in materials and workmanship
7-year warranty for major structural defects

In addition to the warranty, if you plan on building a home for the purposes of selling it, you have to be registered with Tarion. Registered builders are listed in the Ontario Builder Directory. You can search the directory on Tarion.com. The directory includes a 10-year history for the builder as well as if the builder’s license has ever been refused or revoked. If you can’t find a builder in this directory, it means they are not registered in Ontario and maybe operating illegally.

Building Your Own Home

If you intend on building your own home, you should note that your home will not qualify for the statutory warranty. This is because owner-built homes cannot be enrolled with Tarion. These homes also lack a statutory warranty. When you build your own home, you will be responsible for any defects that may arise.

While owner-builders are not required to register with Tarion, they are required to acquire a Letter of Confirmation from Tarion to build their home. If the owner sells the house without residing in it legitimately, they are required to register with Tarion. The owner will also be held responsible for warranty coverage of the house. If the owner doesn’t register with Tarion and enroll the house before selling, the owner may be subject to prosecution and may face hefty fines or even imprisonment.

When is a Letter of Confirmation to Build Required?

You will need a Letter of Confirmation before obtaining a permit in the following circumstances:

You are building the house on land that you own
You exercise a lot of control over the construction of part or the whole home
You will be living in that home

By building your own home, you take up the responsibility of a builder.

You will be responsible for the following:

Workspace safety and insurance: This includes being responsible for all the workers.
Obtaining the right city permits for the various stages of construction, such as electrical and hydro work.
Selecting, contracting directly with, terminating contracts with, or directly paying subcontractors, suppliers, or trades.
Reviewing, revising, approving, supervising, or directing work or materials.

Requirements for Owner-Builders

To build your own home, you are required to get a Letter of Confirmation from Tarion. This allows you to build your own home without having to register with Tarion as a builder. Your home will not be qualified for a Tarion warranty. After receiving the Letter of Confirmation, you can complete the application for building permits.

For you to be eligible for the Letter of Confirmation, you are required to include the following:

Complete and signed application forms. These have to be signed by the landowners.
Submission of proof of land ownership
A copy of the project management contract (where applicable)

Frequently Asked Questions

What happens if your application is rejected?

Tarion can reject an application for a Letter of Confirmation. The application is usually rejected when it is believed the home doesn’t fit in the parameters of the Letter of Confirmation requirements. You can appeal the decision using the instructions included in the Letter of Rejection. You should also note that a rejection letter for a Letter of Confirmation can impact your subsequent applications.

How much does it cost to apply for a Letter of Confirmation?

There are no fees charged for applying or receiving the Letter of Confirmation. It takes 3 to 5 days to get a Letter of Confirmation.

What if you plan on selling your owner-built home?

If you qualified for the Letter of Confirmation but still want to sell the house once the construction is done, you will have to register with Tarion. You will also be responsible for the warranty coverage of the home. Failing to register with Tarion before the house is sold can lead to prosecution, and you may face hefty fines and/or imprisonment.