Home Warranty in Canada

This Page's Content Was Last Updated: August 22, 2022
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What You Should Know

  • A home warranty is a guarantee by the builder against certain defects, such as labour, material, and structural defects.
  • A new home warranty is mandatory for new homes sold in Ontario, Quebec, British Columbia, and Alberta.
  • In other provinces, Home Builders' Associations may require builders to provide new home warranties as a condition of membership.
  • Home warranties are attached to the home and not the owner, which means that a resale home may still have warranty coverage remaining.

What is a Home Warranty?

A home warranty is a guarantee provided by the builder of a home against certain defects within a period of time. It’s similar to a manufacturer's warranty that you might get when you purchase a car, or a product warranty for electronic devices. With a home warranty, the builder guarantees to repair or provide compensation for covered defects. This protects home buyers from potential costly repairs down the road.

Is a New Home Warranty Mandatory?

Builders selling new homes are required to provide new home warranties in Ontario, Quebec, British Columbia, and Alberta. In these provinces, new home warranties are considered to be statutory warranties, as they are required by law. There are exceptions to this, such as for owner-built homes that are not intended for resale. Builders must also live in owner-built homes for a certain period of time before they can be resold. However, an implied warranty may still exist for owner-built homes in certain provinces, which can be as long as 10 years in British Columbia.

Purchasing a new home without a warranty in a province that requires it is known as purchasing an illegally built home. Since builders need to be licensed in order to be eligible for home warranty coverage, purchasing a home with a warranty means that the home is built up to code and has paid taxes. From 2009 to 2019, Tarion paid out $19.8 million to 869 homeowners to cover for the cost of repairs for illegally built homes. Illegally built homes are a way for builders to avoid paying taxes, and it may have substandard construction.

New home warranties aren’t mandatory in other provinces, but local Home Builders’ Associations may require builders to provide new home warranties to buyers as a condition of membership.

Home Warranty Requirement by Province

ONQCMBSKABBCNBNSNLPE

Home Warranty Required

Not Required
Required

Maximum Home Warranty Coverage Limit by Province

ProvinceSingle-FamilyMulti-Family/CondoCommon Elements (Condo)
Ontario$300,000$300,000$100,000 per unit (Up to $3.5 million)
British Columbia$200,000$100,000$100,000 per unit (Up to $3.5 million)
Alberta$265,000$130,000$130,000 per unit (Up to $3.3 million)
Quebec$300,000$200,000$200,000 per unit (Up to $3 million)

Home Warranty in Ontario

As a homebuyer in Ontario, it's important to be aware of the Ontario New Home Warranties Plan Act (ONHWP Act), which requires new home warranties for all new homes sold in Ontario.

Tarion Warranty Corporation is responsible for enforcing the ONHWP Act. Prior to 2021, Tarion was also responsible for licensing new home builders and vendors in Ontario. The newly created Home Construction Regulatory Authority (HCRA) took over this responsibility in February 2021. Both Tarion and HCRA are private, not-for-profit corporations.

Tarion Warranty Coverage in Ontario

While Tarion enforces the ONHWP Act, they also act as a backstop to guarantee claims. This means that even though home warranties are provided by the builder in Ontario and not by Tarion, there is still a series of guarantees to homebuyers by Tarion that they will provide compensation should builders fail to back their warranties.

The coverage for new home warranties in Ontario that Tarion backstops includes the following:

  • Deposit protection
  • Delayed closing coverage
  • Financial loss protection
  • Work and materials coverage

Tarion’s warranty coverage for work and materials come in one-year, two-year, and seven-year warranty coverage periods. Each warranty period covers different aspects of the home’s labour and materials.

One-Year Warranty Period

Tarion's warranty coverage begins on the day that you take physical possession of the home. During the first one-year period, the builder guarantees that the home is:

  • Fit for habitation
  • Constructed in accordance with the Ontario Building Code
  • Constructed in a workmanlike manner and is free from defects in material

This is required as part of the ONHWP Act (R.S.O. 1990, c. O.31, s. 13 (1)). What this means is that you have one year, starting from when you took possession of the home, to file a claim that the home is either not fit for habitation, violates the Ontario Building Code, or was not constructed in a “workmanlike” manner. Tarion’s Construction Performance Guidelines contain material and workmanship standards that are used when determining if a defect is eligible under the new home warranty.

Two-Year Warranty Period

Defects to work and materials are covered for two years. This includes windows, doors, and caulking defects that cause water penetration. It also covers the home's electrical, plumbing, and heating systems, as well as the exterior cladding of the home, such as brickwork or siding. After this two-year period, homeowners may still have protection under manufacturer’s warranties. This is commonly the case for heating and cooling systems.

Also in this two-year warranty period is protection for water penetration through the basement or foundation walls. Violations of the Ontario Building Code that affect health and safety are also covered for two years. This means that other Ontario Building Code violations are no longer covered after the initial one-year warranty period.

Seven-Year Warranty Period

Major structural defects are covered for seven years. This includes structural load-bearing elements,such as beams, columns, and walls. It also includes defects that affect the use of significant portions of the home.

Tarion’s Major Structural Defect Warranty Interpretation Guideline is used when determining if there is a major structural defect. According to Tarion, elements that are considered to be “load-bearing elements” include:

  • Footings
  • Beams
  • Foundation walls
  • Joists
  • Pads
  • Load-bearing floor slab
  • Piles
  • Structural walls
  • Braces
  • Rafters
  • Plates
  • Roof trusses
  • Teleposts
  • Columns

A major structural defect occurs if the element has failed, if it has been compromised and can no longer function as a load-bearing element, or if it affects the use of the home.

Tarion interprets a significant portion of the home to have been affected if either 25% or more of the total liveable area of the home is affected, or if it affects the use of an area that is required in a home.

For example, if the second floor of a home cannot be accessed due to a defect in the stairs, then this would be considered a major structural defect. If the only bedroom or bathroom in the home has a defect, then this would be a major structural defect.

How Often Do Builders Not Honour Ontario Homeowner Warranties?

A 2019 audit of Tarion by the Government of Ontario found that almost two-thirds of warranty-disputes brought to Tarion were due to builders not honouring their homeowner warranty. Between 2014 and 2018, there were 4,133 cases brought to Tarion where the builder did not honour their home warranty.

Tarion Coverage Limits

WarrantyMaximum Coverage
Freehold Homes and Condominium Units
  • $300,000
Environmentally Harmful Substances or Hazards
  • $50,000
Deposit Protection
  • $60,000, if the purchase price is $600,000 or less
  • 10% of purchase price, up to $100,000, if the purchase price is over $600,000
Delayed Closing Coverage
  • $150/day, up to $7,500
Financial Loss Protection
  • $40,000
Condominium Common Elements
  • $100,000 per unit, up to $3.5 million
Condominium Projects (Units and Common Elements)
  • $50 million
Source: Tarion

The maximum coverage is $300,000 for freehold homes and condominium units. This is the maximum amount that Tarion will pay a homeowner to compensate for repairs should a builder not honour their warranty. Tarion will also pay out a maximum of $50,000 for damage caused by environmentally harmful substances or hazards.

Tarion's deposit protection has a maximum coverage of $60,000 if the purchase price is $600,000 or less, or 10% of the purchase price up to a maximum of $100,00, for homes with a purchase price over $600,000.

Delayed closing coverage allows you to claim up to $7,500 should your home's closing date, or your pre-construction condo's occupancy date, be delayed beyond your purchase agreement's firm closing or occupancy date. This may be different from your freehold home's tentative closing date or your condo's tentative occupancy date. Check your purchase agreement's Statement of Critical Dates to find your firm and tentative dates.

The amount that you can claim from your builder is $150 per day, up to a maximum claim of $7,500. This helps to cover living expenses to compensate for your home's delayed occupancy. You have up to one year after the eventual occupancy of your new home to make a claim to Tarion, or within 180 days of the missed occupancy date to make a claim to your builder.

If you purchased a contract home, which is when you hire a builder to construct a home on land that you already own, then you may be protected on the amount that you have paid the builder if they fail to complete the contract. The maximum amount that the owner can claim is the difference between the amount paid and the value received, up to $40,000. For example, if an owner paid $200,000 but only $180,000 of work and materials was provided, then the owner may be eligible for $20,000 in compensation.

Condo Project Cancellations in Ontario

Between 2009 and 2018, Ontario builders and developers cancelled 460 condominium projects for a total of 33,850 cancelled condo units. From 2018 to 2021, a further 51 condo projects were cancelled.

According to an audit of Tarion, the most common reasons for a cancelled condo project in Ontario are:

  • Unable to obtain financing (45%)
  • Did not meet required sale threshold (21%)
  • Zoning/municipal approval delays (18%)

The Condominum Act requires deposits for cancelled pre-construction condo projects to be refunded plus interest. The amount of interest that the builder will need to pay the buyer is the Bank of Canada’s overnight interest rate minus 2%. For example, if the Bank of Canada’s rate is 3%, then the builder will need to pay 1% interest on the deposit for the time that it was held. The current Bank of Canada rate is 0.50% as of March 2022. This means that no interest will be payable.

If the builder does not return the pre-construction deposit, and the trustee does not return the deposit, then Tarion can compensate the buyer for up to $20,000.

How Much Does Tarion Home Warranty Cost?

Home buyers do not pay for the cost of Tarion's home warranty coverage. Instead, the builder will need to pay a fee to Tarion when they enroll the home with Tarion before construction starts. The cost of Tarion may be passed onto the home buyer through a higher home sales price. The cost of Tarion's enrollment fee depends on the sales price of the home, excluding HST. HCRA, Ontario’s regulator of home builders, also charges a regulatory oversight fee. This fee is a flat $145 that does not depend on the home’s sale price. Both Tarion's enrolment fee and HCRA's fee are subject to Ontario's 13% HST.

Tarion Warranty Enrolment Fees

Home Sales Price (Excluding HST)Tarion Warranty Enrolment Fee
$0 - $100,000$330
$100,000.01 - $150,000$375
$150,000.01 - $200,000$445
$200,000.01 - $250,000$515
$250,000.01 - $300,000$585
$300,000.01 - $350,000$655
$350,000.01 - $400,000$725
$400,000.01 - $450,000$815
$450,000.01 - $500,000$890
$500,000.01 - $550,000$970
$550,000.01 - $600,000$1,020
$600,000.01 - $650,000$1,075
$650,000.01 - $700,000$1,155
$700,000.01 - $750,000$1,205
$750,000.01 - $800,000$1,260
$800,000.01 - $850,000$1,310
$850,000.01 - $900,000$1,430
$900,000.01 - $950,000$1,485
$950,000.01 - $1,000,000$1,540
$1,000,000.01 - $1,500,000$1,670
Over $1,500,000.01$1,745
Source: Tarion

Alberta New Home Warranty

Alberta’s New Home Buyer Protection Act requires all new homes built in Alberta to be covered by a home warranty insurance contract. New home warranty is also required if more than 75% of a home is being rebuilt. Alberta new home warranties are commonly called 1-2-5-10 Coverage, as it covers certain defects from 1 to 10 years. Alberta home builders must purchase home warranty coverage in order to get a building permit. This means that homebuyers do not directly pay for the cost of Alberta home warranties. However, the cost may be passed onto the buyer through a higher home price.

Similar to other provinces, it is the homeowner’s responsibility to find defects and make warranty claims. Alberta’s Construction Performance Guide is used to help Albertan homeowners with determining whether an issue will be covered by their new home warranty.

In Alberta, home warranty coverage is through third-party home warranty providers. If you have a claim, then you would file a warranty claim with your home warranty provider, who will then work with your builder. This is unlike Ontario where builders are the ones that provide home warranty coverage and Tarion acts to resolve claim disputes.

Alberta Home Warranty Providers

There are six home warranty providers in Alberta that your builder can choose to purchase coverage from. Having for-profit warranty providers means that there may be an incentive to deny or limit claims. The Alberta New Home Warranty Program (ANHWP) is the only not-for-profit warranty provider in Alberta.

List of Alberta Home Warranty Providers

ProviderProvinces Served
Alberta New Home Warranty Program

(ANHWP)

Alberta
Blanket Home Warranty

(Intact Insurance)

Alberta, Saskatchewan, Manitoba
Millennium Insurance Corporation

Alberta
National Home Warranty

(Intact Insurance)

Alberta, British Columbia, Saskatchewan, Manitoba
Progressive Home Warranty

(Trisura/Echelon Insurance)

Alberta, British Columbia, Saskatchewan, Manitoba
Travelers Canada

Alberta, British Columbia and Saskatchewan
WBI Home Warranty

(Intact Insurance)

Alberta, British Columbia, Saskatchewan, Manitoba

Alberta Home Warranty Coverage

The following home warranty coverage is the minimum required coverage in Alberta:

One Year

Defects in labour and materials are covered for one year. Examples would be flooring and cabinets.

Two Years

Defects in labour and materials of delivery and distribution systems are covered for two years. This includes heating, air conditioning, plumbing, and electrical systems.

Five Years

Defects in the building envelope, such as the roof or exterior walls, are covered for five years.

Ten Years

Major structural defects are covered for ten years in Alberta. That’s longer than the seven years that major structural defects are covered for in Ontario. This includes the frame or foundation of the home.

Alberta Home Warranty Coverage Limits

There is a maximum amount that your home warranty provider will pay out in claims, which will be either your original purchase price or a coverage limit. This upper limit is established through Alberta’s Home Warranty Insurance Regulation. For single-family homes, the maximum coverage limit is $265,000. Multi-family homes that are not part of a condominium, such as duplex homes and row townhomes, also have a coverage limit of $265,000. Condos have a maximum coverage limit of $130,000.

WarrantyMaximum Coverage
Single-Family Homes$265,000
Multi-Family Homes Not in a Condominium (Duplex/Row Townhomes)$265,000
Condominiums$130,000
Common Property in a Condo$130,000 per unit, up to $3.3 million

How Much Does New Home Warranty Cost in Alberta?

According to the Ministry of Municipal Affairs’ guide for small builders, new home warranties in Alberta usually cost between $1,500 to $3,000 per policy.

Optional Warranty Coverage in Alberta

Additional home warranty coverage can be purchased by your homebuilder. In fact, Alberta’s New Home Buyer Protection Act requires warranty providers to provide home builders with the option to purchase extended building envelope coverage of an additional two years. If your builder chooses to purchase extended coverage for your building envelope, this will extend the warranty for your building envelope from the minimum 5 years to an extended coverage of 7 years.

British Columbia New Home Warranty

British Columbia's Homeowner Protection Act requires all new homes to be covered by third-party home warranty insurance. Similar to other provinces, BC’s Residential Construction Performance Guide is used as a reference for the minimum performance required in a new home. Home warranty insurance is commonly called 2-5-10 home warranty insurance in British Columbia.

BC Home Warranty Providers

There are only five home warranty providers that are authorized by the BC Financial Services Authority (BCFSA) to provide home warranties in British Columbia.

List of BC Home Warranty Providers

ProviderProvinces Served
Pacific Home Warranty

(Trisura/Echelon Insurance)

British Columbia, Alberta, Saskatchewan, Manitoba
New Home Warranty Insurance (Canada) Corporation

(NHWICC)

British Columbia, Alberta, Saskatchewan, Manitoba
National Home Warranty

(Aviva Canada)

British Columbia, Alberta, Saskatchewan, Manitoba
Travelers Canada

British Columbia, Alberta, and Saskatchewan
WBI Home Warranty

(Intact Insurance)

British Columbia, Alberta, Saskatchewan, Manitoba
Source: BC Housing

BC Home Warranty Coverage

The following home warranty coverage is the minimum required coverage in BC:

Two Years

Building Code violations, as well as defects in labour and materials, are covered for 1 year. For the common property of strata corporations, this coverage is extended to 15 months.

Defects that are covered for 2 years include labour and materials for heating, air conditioning, plumbing, and electrical systems. It also includes Building Code violations that may cause damage to the home, as well as defects to caulking, windows, doors, and cladding that may also lead to damage.

Five Years

The building's envelope is covered for 5 years. This includes exterior walls and the roof.

Ten Years

Structural defects are covered for 10 years, with it being either a failure of a load-bearing element, or a defect that significantly affects the use of the home.

WarrantyMaximum Coverage
Single-Family Homes (Fee-Simple Homes)$200,000
Strata Homes$100,000
Common Property in a Strata$100,000 per unit, up to $2.5 million

Quebec New Home Warranty

Home warranties are commonly called “Guarantee Plans” in Quebec. In 1999, new home warranties in Quebec became mandatory for all new homes through the “Regulation respecting the guarantee plan for new residential buildings” of Quebec’s Building Act. In Quebec, there can be two types of home warranty coverage. The Guarantee Plan is required in Quebec, while private guarantee plans by third-party providers may be used to offer some warranty coverage.

Quebec Home Warranty Providers

The administrator of Quebec's mandatory Guarantee Plan is Garantie Construction Résidentielle (GCR). GCR is a non-profit organization.

Optional, private guarantee plans are also available.

Quebec Private Home Warranty Providers

Provider
Garantie Habitation des Maîtres Bâtisseurs (GHMB)
Garantie des immeubles résidentiels (GIR)
Garantie Qualité Habitation offered by Association de construction du Québec (ACQ)

Quebec Home Warranty Coverage

The following home warranty coverage is provided by the mandatory Garantie Construction Résidentielle (GCR) Guarantee Plan.

One Year

Apparent defects in material and labour, identified after acceptance of the building.

Three Years

Hidden/latent defects in material and labour. Under the Quebec Guarantee Plan, a latent defect is defined as a serious defect that was already present in the home during construction but was unknown to you. An example would be a leaking roof.

Five Years

Structural defects in design, construction, or due to execution.

Quebec Home Warranty Coverage Limits

WarrantyMaximum Coverage
Single-Family Homes$300,000
Multi-Family Homes (Condos, Duplex to Quintuplex)$200,000
Common Property of Multi-Family Homes (Condos, Duplex to Quintuplex)$200,000 per unit (Up to $3,000,000)
Late Delivery (Relocation, Moving, and Storage Costs)$6,000
Water Supply (Single-Family Homes)$300,000
Water Supply (Multi-Family Homes)$300,000 per unit (Up to $3,000,000)
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