New construction is a big part of how London and nearby communities are growing, and buying from a builder is different from buying a resale home. The most important difference is the Tarion warranty. Here is how it works in plain language, based on what Tarion publishes.
The three warranty periods
Coverage starts on your possession date and is split into stages.
One year
The one-year warranty covers defects in workmanship and materials, violations of the Ontario Building Code, and unauthorized substitutions of items agreed to in your contract. The home also has to be fit to live in.
Two years
The two-year warranty covers water penetration through basement or foundation walls and into the building envelope, exterior cladding that detaches or deteriorates because of defects, and defects in the electrical, plumbing and heating systems. Building Code violations that affect health and safety are also included.
Seven years
The seven-year warranty covers major structural defects, meaning defects that cause a load-bearing element to fail or significantly impair the use of the home. Tarion gives examples such as soil movement, major cracks in basement walls, and serious distortion of the roof structure. It excludes damage to finishes and dampness that does not come from a load-bearing failure. Read the Tarion coverage guide for the exact wording.
Statutory maximum coverage
The maximum depends on when your Agreement of Purchase and Sale was signed. For agreements signed on or after July 1, 2023, Tarion lists:
- freehold homes: $400,000
- condo units: $300,000
- condo common elements: $100,000 times the number of units, up to $3,500,000
For agreements signed from February 1, 2021 up to July 1, 2023, the freehold maximum was $300,000. Make sure you know which date applies to your contract.
Deposit protection
Tarion also protects new home deposits, and the rules have been changing, including a requirement to notify Tarion after you sign. We are not going to quote dollar amounts here, because the figures differ between sources and Tarion has deferred some changes. Before signing, ask your lawyer to confirm how your deposit is protected and what you must file, and check Tarion’s site for the current rules.
Costs to ask your builder about
New builds can have charges that resale homes do not, such as HST treatment, development charges and adjustments on closing. The federal first-time buyer GST/HST rebate may apply to eligible new homes, which we cover in our first-time home buyer programs guide. Land transfer tax is still paid; see our Ontario land transfer tax guide.
Practical tips before you sign
- Have a real estate lawyer review the Agreement of Purchase and Sale before you sign.
- Confirm your possession dates and what happens if they change.
- Keep records and photos of any issues you notice before and after possession, and note the warranty deadlines.
- Do not skip the pre-delivery inspection; list every concern in writing.
- Check which neighbourhood suits your life, using our London community guides.
Explore new construction in London
We can help you compare builders, communities and resale alternatives. Visit our new home construction page, browse the buyer hub, or contact us. If you need to sell your current home first, request a home valuation.
Questions to ask your builder
- Is the builder registered with Tarion, and how can I confirm it?
- What is included in the base price, and what are the upgrades, lot charges and closing adjustments?
- What are the expected possession dates, and how will changes be communicated?
- How are warranty claims submitted, and who is my first contact after possession?
- What will the pre-delivery inspection involve, and can I bring someone knowledgeable with me?
A good builder will answer these clearly and in writing. If answers are vague, that is worth noting before you commit.
This is general information, not legal advice. Tarion’s rules can change, so confirm details with Tarion and your lawyer.
Common questions
What does the Tarion warranty cover?
Coverage runs in three stages after possession: one year for workmanship, materials and Building Code violations; two years for items such as water penetration and defects in electrical, plumbing and heating systems; and seven years for major structural defects (Tarion).
What is the maximum Tarion coverage?
For freehold homes with an Agreement of Purchase and Sale signed on or after July 1, 2023, the statutory maximum is $400,000. For condo units it is $300,000 (Tarion).
Does Tarion protect my deposit?
Tarion offers deposit protection on new home purchases, and it has introduced a requirement to notify Tarion after signing. Amounts and rules have been changing, so confirm the current figures on Tarion's website before you sign.
Do I need a lawyer for a new build?
A real estate lawyer should review your Agreement of Purchase and Sale before you sign, because builder agreements include adjustments, closing dates and warranty terms specific to new construction.
Keep exploring
- London real estate guideHomes, local anchors and what to ask before you buy or sell in London.
- New home constructionNew build communities, with a REALTOR® on your side.
- Buy a homeSearch listings and get a home search set up for you.
Sources
Figures and rules were checked against these sources on the date this post was published or last updated.
Not advice. This post is general information only. It is not legal, tax, mortgage or investment advice. Rules and figures change, so confirm the details for your own situation with a qualified professional before acting.
Market data. Any prices quoted are general information for the period stated. They are not an appraisal or an opinion of value for any specific property.
