Buying a pre-construction home? Tips for being an informed buyer Image

Buying a pre-construction home? Tips for being an informed buyer

By Tarion on May 14, 2024

Buying a pre-construction home offers the benefits of owning a brand new home with all new materials, greater energy efficiency, and the option to customize the home to suit your tastes. But the new home journey can be complex. Compared to buying a resale home, the home might still need to be built before you get the keys. This means that there’s usually a longer waiting period and it comes with some potential risks.

The good news is that in Ontario, most newly built homes come with a warranty that’s provided by the builder and supported by Tarion, a consumer protection organization established by the provincial government. The warranty provides coverage against defects for up to seven years after the home is completed, as well as protection against specific risks before the home is ready for you to move in.

Before you buy, here are some key areas to research and review so that you’re better informed in your new home journey.

Your builder’s reputation
Buy from a builder that has a good reputation for delivering high-quality homes and customer service. It’s a good idea to read online reviews and visit showrooms or model suites, but most importantly, check the Ontario Builder Directory online. This will help you make sure the builder is licensed to build and sell homes in this province and check whether they have a history of any disciplinary actions or homeowner claims.

If you don’t see the builder’s name listed, this means they’re not licensed and you should choose a different builder.

The “key” to your new home – your purchase agreement
Your purchase agreement is a legal and binding contract that outlines in detail everything that’s included in the price of your home. Before you sign it, get advice from a real estate or condo lawyer so that you understand the terms and conditions, and any potential risks of the sale.

Once the agreement is signed, register your purchase agreement online at Tarion’s website. This starts off your home buying journey right by creating a record of your purchase and allows Tarion to share important information with you before you get the keys to your new home.

Deposit protection
Your deposit has specific coverage provided by Tarion up to certain limits in case the purchase isn’t completed. This includes money paid to the builder for any upgrades like hardwood floors, or extras like a fireplace.

This coverage applies if you exercise a right to terminate your purchase agreement or in the rare case that a builder goes into bankruptcy or fundamentally breaches your agreement. In general, if your builder can’t deliver your new home and doesn’t return your deposit, you can submit a claim to Tarion for compensation.

Deposit protection limits are based on the type and price of the home you’re buying. For example, for a freehold home priced at $600,000 or higher, your deposit is protected for 10 per cent of the purchase price, up to a maximum of $100,000. Coverage limits for other types of homes are available on Tarion’s website.

Keep in mind that any money you pay to the builder before paying a deposit, like a fee to hold your purchase, isn’t covered by the warranty. In this case, either ask the builder to hold the money in trust or get a receipt and keep it as a safeguard against potential disputes.

Coverage against delays
The builder’s warranty comes with a guarantee that your home will be ready for you to move into by a specific date, or by a specific extended date in case of a delay. You can find these dates and other important details in the Addendum attached to your purchase agreement.

If your closing or occupancy date is delayed beyond this specific date, you could claim up to $7,500 in compensation from your builder to help you cover some of the expenses caused by the delay, like extra moving, storage and living expenses. Similar to deposit protection, this coverage is supported by Tarion, and if your builder does not provide the compensation, you can submit a claim to Tarion.

Get ready for the responsibilities of new home ownership

Every new home buyer deserves to feel peace of mind that they’re getting the well-built home they were promised. While you wait for your new home to be completed, now’s a perfect time to be proactive: learn what the builder’s warranty covers, ways to address any potential issues with your builder, and how Tarion can help.

Find more tips and information about the builder’s warranty at

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