Protecting new home buyers against builders’ errors

You get a manufacturer’s warranty when buying an electrical appliance, such as a toaster, and you can purchase an extended warranty from the retailer. All this for a product that costs as little as $30 to $50.

So, when you buy a newly-built house or condo that costs $150,000 to $1+ million, you assume you will receive as much protection as when you buy an appliance.

But there’s a group of dissatisfied homeowners who write to me almost daily, complaining about problems they have experienced with Tarion Warranty Corp.

Tarion was set up by the Ontario government in 1976 to administer a statutory warranty for homes built by registered builders.

Burned buyers want to see the Ontario government set up an independent value-for-money audit of Tarion’s operations. Here is what they say:

Tarion is too close to the builders it’s supposed to regulate and doesn’t have a clear consumer mandate.

When consumers try to appeal Tarion’s decisions at a tribunal, they often find Tarion sends its own lawyers to testify against them.

Tarion has a monopoly on home warranties. It reports to the Ontario consumer ministry, but it can’t be investigated by the Auditor General or the Ontario Ombudsman.

Last week, I did a Toronto Star column about being invited to a media breakfast at Tarion’s office to be told of a major repair (more than $5 million) done to 23 homes that had cracked foundations as a result of land settling and sinking.

Some Tarion dissidents wanted to comment on this story, but didn’t get a chance because the Star closed off comments quickly. They can do so here.

P.S. Here’s an update on my blog post about hiring a roofer. After getting four or five estimates, I hired a company that a reader recommended.

The work took several weeks because of rain delays and cost more than $10,000. They removed several layers of flat roof installed in the past, making my roof six inches lower than my neighbour’s on the other side.

It’s not an easy process to manage and it’s not finished yet. My neighbour found a spot the roofers had missed, which was visible from his back yard. They’re coming back tomorrow to finish the job.

Author: Ellen Roseman

Consumer advocate and personal finance author and instructor.

35 thoughts on “Protecting new home buyers against builders’ errors”

  1. Re the Toronto Star, July 20, 2014, Ellen Roseman column

    Ellen said that the Tarion CEO (Bogach) posed these questions: “What if there was no warranty fund? What if there was no money in our guarantee fund?”

    Did the media present at this “charm offensive” (Ellen’s words) ask basic questions of Mr. Bogach and Tarion’s board chair (Spiteri) in return such as:

    How did these homes ever get built THERE in the first place?

    How did this builder qualify to be a Tarion-approved builder in the first place?

    What does this builder’s record now show on the Tarion website? Is this builder still a Tarion-approved builder?

    While Tarion referred to this as a “case study”, it is imperative to remember that it is not just about the more than $5 million repair.

    There were real families involved whose lives were turned upside down for an extended period of time (e.g., while investigations took place to figure what went so wrong with their brand new homes and while these homes were repaired). The repairs alone took three years….

    This full “case study” should be made available to the public. It should not only include a close critique of the builder and Tarion’s role and responsibilities (as the builders’ regulator and the warranty provider), but also the other key stakeholders in the so-called “safety net” that allowed this disaster to happen, e.g., the municipality (that issued the building permit and was supposed to have inspected during construction to ensure that the minimum standards of the Ontario Building Code were met), the professional engineers that signed off before and during construction, etc.

    This “case study” should not be construed as Tarion riding up on white horses to save the day.

  2. The TARION-New Homebuyer’s mandatory warranty was the worst experience in our life.

    We would never purchase a New Home or Condo again. Builder and TARION treated us
    extremely poorly. Both worked nicely together against us consumers.

    Builder even retaliated against us because we did not obey their monopoly pressure as we appealed to License Appeal Tribunal.

    Our attempts to get help from the Tarion Ombudsman failed completely as he had to support the builder in his so-called findings.

    Ministry of Consumer Services did not do anything. We still suffer under retaliations from builder.

    Many bad experiences happened here in our community. Consumer protection does not exist!

  3. Tarion did not answer many so important questions as promised during public
    meeting April 30, 2014. Important questions which Teleconference participants
    raised and not answered at all:

    Answer from TARION Q&A to Everyone:
    “Please note that we cannot address questions discussing individual issues or

    Nothing happened !!!!

  4. What needs to be mentioned is that Tarion is also the “licensor of builders” in Ontario, and the “regulator of the building industry” in Ontario. In addition to this, Tarion has been delegated by the Government of Ontario to provide mandatory warranty coverage through fees passed on to new home buyers by their licensed builders. No one can “opt out” of this coverage, as you can with your auto insurer if you’re dissatisfied with them. It is Ontario law.

    In the absence of any penalty or consequence by the “regulator” of the industry to builders who short-cut in workmanship or materials and cause construction defects, there is no deterrent for shoddy buiding practices. This might explain why we continue to see so much of this in new home/condo construction.

    Many consumers have discovered concealed defects after the 2-year warranty has expired or found that their defects did not fit the narrow definiton of a “major structural defect” and they had to pay for defects on their own, caused by a Tarion-licensed builder. And no record of this is kept on the builder’s Tarion record.

    Tarion is obliged to give “full disclosure” on defects it inspects. However, many consumers have complained the defects they’ve discovered (and about which Tarion has fought them in the License Appeal Tribunal, LAT) are not listed on Tarion’s builder records. So, future home buyers cannot be properly informed of this before they go house-hunting.

    It’s no secret the building industry has several hugely powerful and affluent lobby groups, and they are by far the largest contributors to political re-election campaigns. Not only that, but the President of the Liberal Party of Ontario is a Tarion Senior VP, and the Tarion board is builder-heavy with 8 builders appointed by one of the most powerful lobby groups: the Ontario Home Builders Association (OHBA).

    Not one consumer advocate sits on Tarion’s board. Not one.

    It is unclear if anyone on Tarion’s board has any detailed experience with the warranty claims process, new home defects or legal proceedings at the LAT, beyond the experience of simply being a homeowner, a corporate executive and a consumer.

    Tarion and the Ministry seem to have been able to keep information about these board members close to their chest, or vague enough to be unhelpful.

    There seems to be a “Consumer Advisory Council” at Tarion, but it operates, to all accounts, in virtual secrecy: currently has no Chair and consumers are not allowed to contact it directly. It does not report back to consumers who have tried to give input on policy.

    Large corporations are often notoriously bad at listening to criticism from their customers and Tarion is no exception.

    It doesn’t take much to connect the dots on what’s going on here. Not only consumers are dissatisfied, but Tarion’s own employees sent a letter to Premier Wynne in March of 2014 voicing serious concerns about bias toward builders at Tarion, conflicts of interest and lack of adequate consumer protection for new home buyers.

    Premier Wynne has not responded to any concerns sent directly to her since she took office in Feb. 2013; nor did Premier McGuinty. And since the Liberal government changes Ministers of Consumer Services every 2 years or so, there’s no time for any one Minister to get a real understanding of the complex issues regarding Tarion and fix them.

    Moreover, it appears there is no political will to reform Tarion to help consumers who’ve found themselves without the warranty coverage they were “guaranteed” as a “backstop” against the builder’s work. The building industry appears to have very long toes that no one dares to step on, lest it run afoul of this job-creation-political-donation Goliath.

    What needs to change is the Legislation governing Tarion, which could enable the Auditor General of Ontario to look into Tarion’s books and/or give the Ombudsman of Ontario the right to scrutinize Tarion’s business practices.

    Consumers whom Ms. Roseman refers to as “Tarion dissidents” have been busy working for the last several years with MPPs to bring new legislation to Queen’s Park for debate and vote. This might finally provide some credible and meaningful oversight and scrutiny of Tarion and bring it back to its consumer focus.

    A monopoly without proper oversight spells problems for consumers, the most vulnerable party, the very people this legislation was created to protect in the first place.

    For more information on consumer issues with the new home warranty see my Blog at

    Thank you to Ellen Roseman of The Star for providing her Blog as an opportunity for consumers to give feedback on Tarion.

  5. The Toronto Star and reporters Ellen Roseman and Kenyon Wallace are willing to write, for example, about smaller floor space than promised, fireplace substitutions and other construction defects caused by builders, and Tarion’s lack of disclosure of bad builders.

    However, they and other Star reporters, Kevin Donovan, Robert Cribb and David Bruser, are not writing about the so-called “Shuman Test Fraud”, an out-and-out fraud perpetrated by Tarion and its lawyers in numerous cases by their use of a legal test, the Shuman or Values Test, which they knew to be false, to determine the warrantability of new homes in Ontario.

    Ms. Roseman, why is the Toronto Star, in effect, protecting Tarion by not reporting that story in the public interest?

  6. Also important to add – many new home defects are not “errors” by builders. Some are caused by short-cutting in materials or workmanship, or squeezing sub-trades, enabling builders to maximize their profits at someone else’s expense.

    If all builders were honest or competent, we wouldn’t need Tarion in the first place. Many defects are concealed, and not discovered within the 2-year Tarion waranty period, and also do not qualify under the 7-year “major structural defect” definition either.

    So the homeowner is on his or her own to pay for these. Few have money to take the builder to other Ontario courts for breach of contract.

    The example cited in Ms. Roseman’s article which Tarion presented at its media event – a $5 million repair to “cracked foundations” in a multi-residential project, seems odd. Due to “a land settling and sinking problem,” the attendees were told.

    Earlier reports from those who attended the media event said Tarion attributed this “cracked foundation” to a commercial project built nearby, and a swimming pool. If the defect was not caused by the builder, why is Tarion warranting it? Is the warranty fund not to compensate for shoddy work or “errors” by its licensed builders?

    If the problem was caused by a third party, will Tarion sue to recoup the money it had to pay out of the warranty fund for problems caused by others? Wonder if anyone asked this question at the media event.

    Tarion’s President would not disclose the builder’s name or the location of the development, which rang familiar to many consumers who’ve been trying to get complete Tarion builder track records for years, without success.

    If it’s true the builder – and his structural engineers – and the Municipal inspectors, who must have ok’d the foundation prior to construction of the homes, were not “at fault” for a $5,000,000 problem, why the need for secrecy?

  7. Will Tarion publish a full transcipt of the minutes of their Annual Public Meeting of April 30th, 2014 – on their website? The Q&A period of over 1 hour exposed considerable discontent about Tarion’s policies from the over 200 consumers in attendance.

    These may be “inconveneint truths” which Tarion may wish to present in a watered-down “summary”, as they did last year. A true representation of consumer questions can only be rendered in minutes, not a summary.

    In the interests of transparency and accountability to the public and the “oversight” Ministry, we hope Tarion will publish minutes of the questions raised at this meeting, which took place over 2 months ago.

    So far, Tarion has refused to do this, despite urging from consumers and a former MPP to do so. Whose interests is this serving?

  8. Many new homeowners are dissatisfied with the Tarion warranty. Its much-promoted guarantees have left many new homeowners paying for builders’ shoddy work.

    There is no adequate government oversight and no accountability to consumers. The Tarion Builder Directory is not an accurate or complete record of builder defects, so not useful to new home buyers.

  9. I agree Tarion needs to have proper oversight by the Auditor General of Ontario or the Ombudsman of Ontario. It has a consumer protection mandate to protect new home and condo buyers, so has to have proper oversight.

  10. We have to stop new home builders building defects in new homes and condos. No more falling glass, cracked foundations, concealed defects.

    We need tighter regulation of the building industry and stricter licensing standards to protect new home buyers.

    Tarion needs to be reformed to protect new home buyers, not builders.

  11. Tarion, as protector of new home buyers, should be much more proactive and transparent.

    Complete and accurate builder records should be made available on Tarion’s website, so that new home buyers can find the track record of a specific builder and avoid the builder with a bad record.

  12. I question the lack of oversight of Tarion. Considering the size of this portfolio, the number of consumers involved, the lucrative warranty fees pouring in and the powerful builders’ lobby, I wonder how the little person, otherwise called a “supplicant,” is able to get help.

    If a determined consumer makes an appeal (after Tarion has nixed their complaint), he is advised to get a lawyer and likely has to have building professionals attest to the legitimacy of the problem. I understand that the “quasi-court” procedures can take years.

    The process has been described by the consumer as a meat grinder. To add insult to injury, Tarion with its high-end lawyers (paid for by our warranty fees) becomes the opponent and defender of the builder.

    Usually the consumer does not win, but if the appeal is successful, the costs to the consumer can be prohibitive. This is a cautionary tale that certainly sends a message to anyone who has considered making an appeal.

    This “not for profit” corporation can act with impunity. Does this situation open the door to possible corruption?

    We know what happened in the Quebec construction industry and then, of course, there was the Ornge scandal (no oversight syndrome).

    Ontario the Good is not immune. Who knows what is going on? After all, greed is in the heart of all men/women.

    Opportunities, cloaked in a web of seeming legitimacy, are powerful. And then there is that age old adage, “Power corrupts.” HMMMM….

    I understand that there are more “chiefs than Indians” at Tarion. There is the President and 9 vice presidents, an Ombudsman, the board, etc.

    I wonder what the financial remuneration is in this “not for profit” organization. It’s a secret.

    (By the way, I do not believe that all builders are at fault.)

    I question the recent appointment of a Tarion employee to the position of President of the Ontario Liberal Party. It does leave an unpleasant smell, considering that builders are said to be major financial supporters of (some?) parties. Is there not a whiff of conflict of interest?

    The timing is somewhat suspect, since the pressure on the Liberals and Tarion had been escalating daily, thanks to a barrage of complaints from the CPBH adherents.

    I wonder about the letter detailing INSIDE information (very interesting and believable) sent by anonymous Tarion employees who expressed support for an audit of Tarion.

    By the way, where does the money come from when Tarion holds an annual awards evening for the builders and a special VIP, the Minister of Consumer Services?

  13. As a consultant and supplier to the building industry for over 25 years and having worked for builders, homeowners and Tarion in dispute resolution, I was frankly quite disappointed in this article.

    It certainly didn’t meet the high standards that consumers have come to expect of journalists.

    You give an example of how Tarion helped resolve a foundation issue for 23 homeowners for a problem that was caused by mother earth settling over time. This is within the scope of Tarion, providing protection to both builders and homeowners for occurrences that are beyond their control or expectations.

    This makes buying a new home a much safer investment than buying an older home, where no such protection is afforded to the homeowner, except perhaps through their own insurance policy (although many of those exclude coverage for acts of God).

    Why the negative tone of the article? Tarion came to provide aid for a natural phenomenon, something many other insurance companies would not cover.

    I don’t doubt there are both homeowners and builders who aren’t totally satisfied with Tarion’s work, but this article does a disservice to the building community and Tarion.

    In my travels to all housing markets in North America and in speaking with over 5,000 builders, homeowners, architects and other industry stakeholders each year, I can assure you that Ontario home buyers are better served by Ontario’s comprehensive building code and warranty system than the vast majority of home buyers in either the US or Canada.

    Always room for improvement of course, especially in light of the extraordinary increase in homeowner expectations over the last few years, but well served, nonetheless.

    P.S. If you want an article topic, delve into these extraordinary expectations consumers have in North America with respect to housing. We have really gotten pretty spoiled.

  14. Ellen, as a Past Chairman of Tarion’s predecessor (the Ontario New Home Warranty Program), I think they do a good job putting the consumer first.

    There probably is a story, Ellen, looking at the history of the program. There was a time in the 1970s when the industry was on the front pages of the Toronto Star for all the wrong reasons.

    A group of reputable builders approached then Ontario Premier Bill Davis to establish a Home Warranty Program to protect the consumer. It would cost the province nothing.

    The Premier gave them his blessing and the consumer is far better protected today than in the ’70s.

    I think it’s a story that should be told regularly and often.

    In my opinion, Tarion does a good job and your comment re transparency should be examined and reacted to, if required.

  15. Hi Ellen, about TARION, I gather you are helping fight the good fight. This will be a long fight, considering the ties between the Liberals and the development industry.

    I got involved with this issue many moons ago. In fact, I say, with no modesty, it was a series I did while at Global TV that helped create the conditions to set up the new home warranty program (i.e. TARION).

    I watched it move from consumer home buyer-centric to builder love-in. But there are signs that the government is starting to listen to the complaints and lack of consumer support and might do something.

  16. From Colin MacKay’s article in Belleville Intelligencer newspaper, Aug. 6, 2013, headline “Warranty system slanted”:

    New home owners in Belleville, and all over Ontario, rightfully expect that their new homes will be built properly by reputable licensed builders and that they will be covered in case of defects or improperly structured homes.

    Almost unbelievably, new homeowners when faced with the prospect of having their warranty claims covered, seemingly face an almost insurmountable battle with the company that, in theory, is there to offer proper compensation and protect them.

    Tarion, a private company used by the Liberal government since 2003, is responsible for administering/enforcing Ontario’s New Home Warranties Plan Act.

    The Ministry of Consumer Services has empowered Tarion to provide consumer protection for the new home owner. At the same time, Tarion is also responsible to regulate the home builders.

    This conflict of interest has resulted in homeowners questioning whose side Tarion is actually on regarding warranty coverage.

    Results from appeals cases suggest they are on the builders’ side. Regrettably, the appeals system used to settle warranty claims by new home owners has evolved into a slam dunk win for the builders in a ridiculous percentage of cases.

    Repeatedly, new homeowners and opposition MPPs have questioned Tarion’s dual role of providing warranties to consumers while, at the same time, being the only licensor of builders.

    The arm’s length oversight, as with Ornge, is used by ministers within the government to deflect responsibility when homeowners’ complaints are brought forward.

    Bottom line is that many complaints from home owners get “filed” by the government or deflected back to Tarion in a vicious circular game.

    To understand a new homeowner’s frustration, it is important to note new homeowners will have just spent considerable time, effort and money on their new home. Thus, they are tired and to find something go wrong with the house, they assume that it will be looked after quickly. Sadly, this is not the case too often.

    Unfortunately for the new homeowner, this is where Tarion and the builders use the warranty system to their advantage.

    According to some homeowners, the builders’ lawyers team up with Tarion’s lawyers in an attempt to thwart a new homeowner’s appeal for warranty protection.

    Knowing the system and how to proceed is a distinct advantage for Tarion versus a new homeowner, who is essentially thrown to the wolves, particularly before the Licence Appeal Tribunal (LAT).

    New homeowners don’t have the time or financial resources or the legal know-how at these hearings to defend themselves properly.

    Read more:

  17. I guess I’m one of those spoiled home-buyers Building Consultant refers to. When I complained to Tarion about the lack of hot water in my brand new home, they quickly set me straight by informing me that hot water is a luxury (only one of many defects to major systems in my home).

    A classic tactic of Tarion and the Industry is to portray anyone who dares complain as spoiled, can’t-be-pleased, just after money. In this vein, a representative from OHBA recently wrote to Tarion demanding changes, because, you know, the poor defenceless builders needed better protection from the powerful unscrupulous homebuyers.

    Building Consultant’s pockets are, I’m sure, nicely lined by the end-user of his services, the new home-buyer he has so much disdain for. My own situation has me driven to the point of collapse. Building Consultant should spend 5 minutes in my spoiled shoes.

  18. The comments on this blog from representatives of the building industry continue to demonstrate why the Ontario government must immediately take steps to adequately protect consumers in relation to the largest purchase most make – a new home.

    Yes, there are good builders, but unfortunately, consumers still have no way to know who they are. There are also marginal and poor builders that have been licensed by the Tarion Warranty Corporation.

    Despite the complaints to Tarion and the Ministry of Consumer Services for the past decade — and the investigative reporting by the Toronto Star published on July 6, 2013, which found that Tarion is keeping “secret” records on those marginal and poor owners — the Tarion website is still not accurate.

    By the time most consumers come to Canadians for Properly Built Homes (CPBH) for help, they are desperate as they try to get the violations of the Ontario Building Code properly repaired. They have already typically battled an unresponsive builder and an unresponsive warranty provider (Tarion).

    It is important to note that CPBH has been running for 10 years with a group of very dedicated volunteers. Our volunteers, who are not paid a cent, do not do this because we have nothing better to do with our lives. We do this because there is a great need to help these homeowners.

    Using Tarion’s own client survey data, approximately 57,000 of the purchasers of newly built homes are dissatisfied with Tarion.

    This number of dissatisfied Tarion customers is unacceptable to most consumers, but Tarion and the Ministry of Consumer Services seem to think that this is acceptable.

    We have recently seen social media pop up in response to this consumer dissatisfaction with Tarion. Check out the Facebook site “Make Tarion Accountable” and the blog

    Earlier this year, Tarion’s own employees blew the whistle on Tarion and wrote to Premier Kathleen Wynne. A copy of the whistleblowers’ letter is on the CPBH website ( under “What’s New” on the home page.

    These brave Tarion employees risked their own jobs to take a stand in this letter, calling for a full audit of Tarion.

    For representatives of the building industry to continue to simply refer to homeowners as “unscrupulous” and “spoiled” seems very naïve.

    If the Ontario government won’t step in and adequately protect consumers, consumers always have the choice not to purchase a newly built home.

    A boycott of new homes would have a significant negative impact on the building industry and the Ontario economy, obviously. Is this what it is going to take to resolve these serious issues?

  19. As a very dissatisfied new home purchaser, I take offense to Building Consultant’s comments.

    After having to put up with many building code violations, poor workmanship and an arrogant and non-responsive Tarion, my recommendation is to never purchase a newly built home.

    If only my issues were actually only as a spoiled consumer.

    The public needs to hear from more dissatisfied new home purchasers.

  20. Odd that both the “building consultant” and “sucessful builder” posting their comments above don’t want to identify themselves by name. Tarion does seem to work well for builders, its consultants, and suppliers who depend on it for business. But Tarion was created to protect consumers, not builders.

    Builders have several powerful lobby groups, a “Tarion Liaison Commitee” within the largest group, and several newspaper columns in which to praise Tarion and their industry. Ms.Roseman is doing her job by listening to the consumer point of view in this complex problem.

    In the example cited above, if the warranty fund pays out $5 million for “mother earth”(!), and “natural phenomena” damage, then surely naturally-occuring landslides are also covered by Tarion?

    The “building consultant” who commented above has labelled homeowners “pretty spoiled” with “extraordinary expectations.” HVAC deficiencies, lack of hot water and leaking basements are hardly evidence of “spoiled” behaviour.

    Tarion often finds ways to get out of compensating for defects through fancy legal footwork, and then not recording anything on the builder’s record.

    Perhaps you would accept a new car with a vital part malfunctioning? If so, we could recommend a few Tarion-licensed builders for you. Rest assured, they all have clean Tarion records.

  21. Tarion should protect new home and condo buyers, and be transparent and accountable to consumers.

  22. Our experience with Tarion is that they are a builder protection warranty service. We experienced so many problems that we would never buy new again. Key problems we experienced are:

    1. Tarion’s staff completely misled us about our warranty multiple times. We were told by our Tarion inspector and several customer relations staff that anything listed as a defect that the builder repairs has an additional year of coverage. Tarion employees neglected to tell us that this is a builder “goodwill” (voluntary) coverage unless Tarion has performed a conciliation inspection. A voluntary warranty is not a warranty.

    2. Our builder installed the exterior cladding in a manner completely different than the manufacturer’s instructions (and in contravention of building code). After having some problems with our siding, the Tarion inspector said there’s 1000s of ways to do things, and there is no obligation for the builder to follow manufacturer’s instructions. According to the Tarion inspector, the builder could attach the siding with duct tape as long as it stayed attached to the house throughout the warranty period. In this instance, the Tarion inspector basically provided a shield to the builder who got away with this as our siding warranty (15-30 years) is now void. Customers should not have to fight Tarion, the city inspectors and the builder when something is so obviously done completely wrong.

    3. Construction problems that required us to vacate our house for a week while repairs and refinishing of floors occurred is done at customer’s expense. Why do consumer’s get delayed occupancy coverage before they move in (with particularly low standards set for move-in condition), but no coverage when poor workmanship forces them out of their house after possession?

    4. The warranty coverage periods are laughable – my car has a better warranty. If something was built properly, a longer warranty period would cost minimal money to builders. Instead a consumer must submit typically hundreds of items upon taking possession and hope to find all the defects while construction is occurring all around them. A better system would be if the warranty coverage period started when both customer and builder signed off on total completion of the home.

    5. Tarion by default is in a position to deny coverage – if the builder fails to take remedy defects, Tarion is supposed to provide the necessary coverage for repairs. This is a huge conflict of interest as the inspector may cost his employer money by siding with a consumer. It’s far easier just to deny a defect.

  23. I have had issues with failed repairs since 2008 and Tarion will not recognize a failed repair.

    3-8″ X 10″ holes were cut out from my foundation wall to accommodate the basement support beams and the patches on the outside keep falling out, due to the steel beams expanding and contracting with the changes in temperature.

    This not a minor defect and I could have issues selling the house down the road.

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