The Tarion new home warranty is mandatory protection on every new home and condo built by a licensed builder in Ontario, and it’s not one warranty but three, stacked in one-year, two-year, and seven-year periods that cover different kinds of problems as a home ages. Tarion is the not-for-profit corporation the province designates to administer this program, and if you’re buying pre-construction or a newly built home in the GTA right now, what it actually protects, how your deposit is covered if a builder runs into trouble before closing, and what the pre-delivery inspection is for are all things worth understanding before you sign. This guide covers the coverage periods, deposit protection, the pre-delivery inspection, and how a warranty claim actually works, alongside everything else a Toronto purchase involves in our complete Toronto real estate guide.
What Tarion actually is
Tarion is a not-for-profit corporation designated by the Ontario government to administer the Ontario New Home Warranties Plan Act. Every new freehold home and every new condo unit built by a licensed builder in the province carries this warranty automatically; a buyer doesn’t opt into it or pay for it separately, and a builder can’t waive it out of the purchase agreement.
Tarion’s role is specifically the warranty: coverage, deposit protection, and the claims process that follows when something goes wrong. Licensing builders and vendors, and handling complaints about a builder’s conduct rather than a defect in the home itself, is a separate regulator’s job: the Home Construction Regulatory Authority, which took over builder licensing from Tarion in February 2021. A defect in your home goes to Tarion. A concern about whether your builder is licensed, or how they’ve conducted themselves, goes to the HCRA.
The program exists because buying pre-construction or a newly built home carries risks a resale purchase doesn’t: nothing exists yet to inspect, deposits sit with a builder for months or years before closing, and problems in new work don’t always surface until a home has been lived in through a full season or two. Tarion’s mandatory warranty, and the separate deposit protection covered below, are the province’s answer to those specific risks, funded by fees builders pay into the program rather than by individual homeowner premiums.
What the warranty covers, and for how long
The one-year warranty, running from the date you take possession, is the broadest of the three. It covers defects in work and materials throughout the home, unauthorized substitutions from what you were sold, and anything that violates the Ontario Building Code as it stood when the home was built. This is the only period that covers general fit-and-finish issues, so a squeaky floor, a poorly fitted door, or a cracked tile needs to be reported within that first year to stay covered; once it ends, cosmetic items of this kind generally aren’t claimable anymore.
The two-year warranty picks up a narrower set of problems tied to how a home performs as it settles: water penetration through the basement or foundation walls, water penetration through the building envelope caused by defective windows, doors, or caulking, defects in the electrical, plumbing, and heating distribution systems, and any Ontario Building Code violation affecting health or safety.
The seven-year warranty, covering years three through seven, is narrower still and reserved for major structural defects: significant damage from soil movement, major cracking in load-bearing walls, or the collapse or serious distortion of structural elements like a roof frame or floor joists. This is deliberately a high bar. It’s not a general extension of the earlier coverage, and everyday wear or a fit-and-finish issue that surfaces in year four isn’t covered by it.
How Tarion protects your deposit
Separate from warranty coverage on the finished home, Tarion protects the deposit you pay before that home even exists, which matters most on a pre-construction purchase where months or years can pass between signing and closing. For a freehold home, deposit protection currently runs up to $60,000 if the purchase price is $600,000 or less, and up to 10% of the price, capped at $100,000, above that. For a condo unit, protection works differently: your deposit first has to be held in trust under the Condominium Act, and Tarion provides a further backstop of up to $20,000 if that trust protection fails for any reason.
Starting April 1, 2026, a freehold purchaser has to register their new home purchase with Tarion, free, through an online tool, within 45 days of signing the agreement of purchase and sale, to qualify for the full deposit coverage described above. Tarion has built in a transition period and says it won’t apply the reduced-coverage consequence for late or missed registration until January 1, 2027, but the registration window itself is already in effect, and registering now avoids depending on exactly when the stricter consequence starts. A purchaser who registers late, once that transition period ends, moves into a separate, capped compensation pool with prorated and delayed payouts rather than the standard limits above.
The pre-delivery inspection
The pre-delivery inspection, or PDI, is mandatory on every Tarion-covered home, and it happens shortly before you take possession. You walk through the home with your builder, and anything incomplete, damaged, missing, not working, or inaccessible for inspection gets recorded on a PDI Form.
Attending matters because the PDI Form becomes the baseline record of the home’s condition at handover. If a warranty claim later needs a conciliation inspection, Tarion looks at whether an issue was noted on that form. A damaged or missing item that wasn’t recorded at the PDI can be genuinely hard to prove happened before you moved in rather than after, so a thorough walkthrough, and a builder’s follow-through on fixing what’s noted, protects you well beyond the day itself.
Making a claim, and what happens if you disagree
Tarion’s claims process runs on a set schedule of forms tied to your coverage periods, most commonly a 30-day form shortly after possession, a year-end form near the end of your first year, and a second-year form if something within that window’s coverage turns up. You submit the relevant form describing the issue, and Tarion reviews it against what the warranty actually covers.
Where an item’s coverage isn’t straightforward, or where you and your builder disagree about whether something qualifies, Tarion runs a conciliation: an assessment, sometimes a desk review of your documentation, sometimes an in-person or virtual inspection of the home, that looks at your purchase agreement, your PDI Form, and the condition of the item itself before Tarion decides whether it’s covered. This is a genuine, structured process with its own timelines, not an informal back-and-forth, and it exists specifically for the cases where a builder and a homeowner don’t see an issue the same way.
Frequently asked questions
What is Tarion and is the warranty mandatory?
Tarion is a not-for-profit corporation the Ontario government designates to administer the Ontario New Home Warranties Plan Act, and the warranty it provides is mandatory, not optional, on every new freehold home and new condo unit built by a licensed builder in the province. You don’t apply for it or pay an extra premium for it separately; it’s built into buying a new home from a licensed builder, and a builder can’t contract out of it. Builder licensing itself is handled by a separate body, the Home Construction Regulatory Authority, so a question about whether your builder is properly licensed goes there rather than to Tarion.
How long does the Tarion warranty last, and what does each period cover?
Coverage runs in three stacked periods. The first year, from your possession date, covers general defects in work and materials, unauthorized substitutions, and Ontario Building Code violations, and it’s the only period that covers everyday fit-and-finish issues. The second year narrows to water penetration through the basement, foundation, or building envelope, defects in electrical, plumbing, and heating distribution systems, and building-code health and safety violations. Years three through seven cover only major structural defects, things like significant soil-movement damage or serious structural distortion, and don’t extend the earlier, broader coverage. A fit-and-finish issue that shows up in year three generally isn’t covered by any remaining period.
What happens to my deposit if my builder goes out of business before closing?
This is exactly what Tarion’s deposit protection exists for, separate from the warranty coverage on the finished home itself. For a freehold home, your deposit is currently protected up to $60,000 on a purchase price of $600,000 or less, and up to 10% of the price to a maximum of $100,000 above that. For a condo, your deposit first sits in a trust account required under the Condominium Act, with Tarion providing a further backstop of up to $20,000 if that trust protection fails. Since April 1, 2026, a freehold purchaser also needs to register their purchase with Tarion within 45 days of signing to lock in the full protection described here, a free step best done as soon as you sign.
Why does attending the pre-delivery inspection matter?
The pre-delivery inspection is your one scheduled opportunity, shortly before you move in, to walk the home with your builder and get every visible issue, damaged, missing, incomplete, or not working, recorded on a formal PDI Form before you take possession. That form becomes the reference point if you later need a warranty claim: Tarion’s conciliation process looks at whether an issue was documented at the PDI when deciding whether it existed before you moved in. Skipping the PDI, or not documenting something you notice, doesn’t forfeit your warranty rights entirely, but it makes proving the timing of a problem meaningfully harder later on.
What if my builder and I disagree about whether something is covered?
Tarion runs a formal conciliation process for exactly this situation. After you submit a warranty form describing the issue, Tarion assesses it against your purchase agreement, your PDI Form, and the item’s actual condition, sometimes through a desk review of documentation and sometimes through an in-person or virtual inspection, and then makes its own determination about whether the item is covered. It’s a structured process with its own steps and timelines, run by Tarion rather than the builder, precisely because a builder and a homeowner won’t always see an issue the same way. Tarion administers this process independently; TorontoProperty.ca isn’t involved in and can’t expedite any individual claim.
Understanding what Tarion actually covers matters most before you sign, not after. Browse current pre-construction and new-build listings on TorontoProperty.ca, and see the rest of our guides for what else a new-build purchase involves, including what happens with your deposit and closing costs in our guide to Ontario’s new home HST rebate, and, if you’re buying a pre-construction condo contract before it closes, our guide to condo assignment sales in Toronto. This guide explains how the Tarion program works generally; Tarion itself administers and decides every individual claim.