5 Foolproof Tips You Need To Know When Hiring A Home Builder
Nail Pops…you know what they are if you own a newly built home or purchased one with-in seven years of being built.
Have you read your new home warranty to find out what you’re covered for?
What? Wait…home warranty?
Yes, you’re protected if you live in Ontario or should be but not everyone is because they fall into the hands of builders who are out to get one thing- MONEY.
Illegal home builders in Ontario is a big deal and should be to you if you plan on building a new home or buying a new build.
You may have turned a blind eye to the exponential amount of new home builds in Ontario but it’s happening at a fast rate.
As long as there are buyers there will continue to be new home construction sites across Ontario and plenty of shady builders waiting for their next hook.
Toronto, Ontario home construction has officially leaked out into the Greater Toronto Area causing home builders to snap up land and build new property after property.
Homes are too expensive for most people in Toronto unless they are sitting on a cool million dollars cash, a hefty down-payment, or a high paying career.
Most of our Torontonian friends rent and the odd few buy a condominium.
Shady Home Builders Pay The Price
Back in 2015, there were two Napanee, Ontario men found building homes without being Registered Home Builders with Tarion.
Both were fined and sentenced to jail time.
Jason Ronald Dun of Napanee and Kaj Owre of Coe Hill, acting on behalf of Granite Ridge Log Homes Limited of Napanee, were sentenced to 30 days in jail and fined $112,500, including victim fine surcharges in the City of Kawartha Lakes POA Court for illegal building.
These were first offences for both defendants.
During the summer of 2009, Granite Ridge Log Homes Limited agreeed to construct a new log home in Haliburton County. Payments were made by the homeowners in excess of $850,000.
The home remains incomplete and was observed with the exterior log shell remaining unfinished, with no roof, according to a press release from the Tarion Warranty Corporation.- My Kawartha.ca
I can’t even imagine what those homeowners are going through and likely continue to go through.
Talk to them today and I bet they know everything they need to know about how they should have protected themselves from the illegal home builders they hired in the first place.
Home Builders Directory
Were you aware that there was a Home Builders Directory in Ontario?
If you didn’t you can join 69% of Ontarians according to a recent survey who were not aware of how to protect themselves from illegal home builders.
I moved from the UK to Canada 10 years ago and since then I’ve rented and purchased a home.
Our home is older so there was no real need to know about warranty programs and illegal builders.
Besides our builder was a reputable company that has built for many years in our community.
Even then knowing what I know now I still should have checked it all out.
I’ve been consistently learning more and more about real estate in Ontario and things that I will be doing differently with our next home.
It’s amazing how we can make some of the biggest decisions of our lives without knowing if we have all the relevant information.
Today, you will learn about how to protect yourself from home builders that have only one thing on their mind-your money.
They may or may not build your house or complete it for that matter not to mention that it may not even fall under Ontario Building Codes.
So much can go wrong.
Protect Yourself and Protect Your Money.
Where to find registered Home Builders In Ontario
First step is to always check the Home Builders Directory at Tarion.
Who is Tarion?
Tarion is a non-profit, private corporation established in 1976 to protect the rights of new home buyers and regulate new home vendors and builders1 according to the terms of the Ontario New Home Warranties Plan Act (the “Act”).
Every home in Ontario must be registered with Tarion who provides warranty protection for all new homes built in Ontario.
This warranty is critical and all Ontario home builders MUST be registered with Tarion before they can offer services.
They also must register a new home build BEFORE they even start the building process.
Tarion has fined illegal builders just like Toronto home builders George and Melina Tanacs back in 2009.
They continue to get complaints every year about home builders that are potentially building without registration or not following through with the warranty program.
This is when Tarion will step in and mediate the process.
A husband and wife Toronto homebuilding team has been fined $240,000 by an Ontario court for building and selling four homes after their licence was revoked.
George and Melina Tanacs, of Passion Homes Inc., were fined the record amount Dec. 11 after being found guilty of 12 counts of illegal building under the Ontario New Home Warranties Plan Act.
It’s largest such fine doled out to an Ontario homebuilder.
“Tarion revoked the Tanacs’ licence [in late 2007] because they continually failed to provide relevant documents as required by the warranty and repeatedly refused to respond to homeowner requests for service and repairs,”. – CBC News
Tarion Deposit Protection
It’s not easy becoming a registered Ontario Home Builder either because Tarion requires home builders to prove they have the financial means to back up their business.
They also look at competence and whether they can complete home builds with confidence and with-in set time frames.
When you sign with a home builder to build you a new house they generally want a deposit to protect themselves.
Tarion is there to protect the homeowner to make sure you are free from losing that deposit with deposit protection from;
- Builders going bankrupt
- The Builder breaches the agreement
Home purchasers can then cancel the agreement legally before closing.
The last thing you want is a builder who takes on too much without the capacity to keep up and finish the project.
Not only does the builder have a time frame but so do the buyers and the financing institution if the build is a one-off custom build.
Buyers of these new home builds could be left on the streets and they need to be protected.
I get it that a house costs lots of money to purchase but if you do it the wrong way you might end up owing more money trying to fix any damaged or unfinished work.
You might struggle to find an illegal home builder once they have your money and take off.
Homeowner mistakes we’ll never make again
Since Mrs. CBB and I paid off our mortgage in 2014 we’ve talked about building a new house on a larger property in a new community.
We’ve looked in builder magazines to get inspired and new property listings at Realtor.ca.
We don’t necessarily want a bigger house just more land to grow a garden and enjoy outdoor space and privacy something we don’t get in our current 2-story home.
Related: Costly New Home Ownership Mistakes You Don’t Want To Make.
You don’t want to just hire a guy or gal you found on Kijiji to build your home and hand them your hard-earned money without first doing a background check.
Mrs. CBB and I learned the hard way when we have our roof re-shingled as our roofers ended up being some guys who liked to roof.
They started up a new roofing company and away they went.
With-in a year they went missing so the supposed warranty we were given was now good for the garbage.
We made a $500 repair to the roof ducts that could have cost us thousands if we didn’t catch a water leak on time.
The damage may have even had become a claim on our house insurance to which it may or may not have been covered.
Red flags are always visible so from now on we vow to be informed homeowners before we sign on the dotted line or offer any money.
Whether you are dealing with a new construction company of home builders or an established company always do your due diligence.
The problem is that not all homeowners are knowledgeable about their rights and they may get the wool pulled over their eyes.
We got lucky that the roof was installed correctly apart from the wrong vent being installed.
A reputable roofing company in our area that we hired helped us out with an inspection and report followed by proper installation.
Tarion Home Warranty Program
Have you ever heard of the Tarion Home Warranty for new homes built in Ontario?
If you’ve considered having your next home built or you’re a first time home buyer make sure you’re an informed purchaser.
The last thing you will want is to find out your home builder is not permitted to be building homes in Ontario.
That could come at a VERY high price to the homeowner who puts their blood, sweat, and tears into the biggest purchase of their lives.
Since the topic of building a home came up we were made aware of Tarion and their home warranty program in Ontario.
I had no idea that they offered a one year, two-year and seven-year warranty on all new home builds in Ontario.
Homeowner and Home Builder Communication
When Mrs. CBB was just 30 years old she had a new house built and vaguely remembers a home warranty program that she read about.
She was a homeowner who eventually had to tell her home builder either you fix the problem or call what she now knows as Tarion.
What happened was the builders had installed the front and back grass when she was away for the weekend.
There was no notice, nothing. Had she of known she would have stayed home or made plans for someone to come over and water the grass.
She came home to a brand new house with burnt grass surrounded by green lush grass on all her neighbour’s property.
Not only was she embarrassed when she confronted the builder they said they put flyers in all of the homeowner’s mailboxes.
What a silly way for a home builder to communicate with a customer who spends hundreds of thousands of dollars on a new home.
Not only did she NOT get the new grass installation notice but they refused to replace the lawn.
Eventually, they complied but it was a process she didn’t care to go through again.
Inclusions and Exclusions
If you visit the Tarion website you will learn about what’s included and excluded in the Tarion Homeowners Warranty.
Your warranty starts before you move into your new home.
The three statutory warranties one, two, and seven-year cover major defects with your home including deposit protection (freehold only) and delayed closing compensation.
You are entitled to warranty coverage up to a maximum of $300,000 for most types of claims covered by the one, two and seven-year warranties.
The maximum statutory warranty coverage available for freehold homes and condominium units is $300,000.
There is a maximum of $15,000 for warranted damage caused by environmentally harmful substances or hazards, and a maximum of $25,000 for coverage of septic systems.
If you have received a payment from another party or other benefit in respect of warranted items, any payment due from Tarion will be reduced by the amount of such payment or benefit.- Source : Tarion
Home Warranty Exclusions
What’s Excluded from the Home Builders Warranty?
This is just as important as what’s included because homeowners need to plan and save money for home repairs.
As a homeowner, we always save at least $5000 a year for home maintenance, especially for wear and tear or items not covered by home insurance.
To do this we talk about what needs to be repaired and potential repairs for the year and save the money in our projected expenses account.
There’s always going to be something that needs fixing whether you have a new house or an older home.
Home Warranty Exclusions are as follows:
- Normal Wear and Tear
- Third-Party Damage
- Secondary Damage
- Supplementary Warranties and Agreements
Some dwellings are not entitled to the statutory warranty coverage.
You can find that info on the Tarion website linked above.
Builders Warranty Coverage Outline
Builders in Ontario are deemed to provide statutory warranty coverage as described in the Ontario New Home Warranties Plan Act.
This coverage includes:
- Protection against Financial Loss for Contract Homes;
- Compensation for delays in closing or occupancy;
- Protection against unauthorized substitutions;
- One and two-year warranties for certain defects in work and materials;
- Protection for deposits;
- A seven-year warranty for major structural defects; and
- Coverage for condominium common elements (the common or shared area of condominium buildings.)
The nail pops, by the way, they aren’t included in your home warranty.
Also, if you buy the home from someone where the home falls within the warranty period make sure to get the information package given to the previous homeowners from Tarion or the home builder.
I bet there are some of you out there that bought a new build house and had no idea that certain defects caused by the home builder were covered under the Tarion Home Warranty.
How to successfully hire An Ontario Home Builder
There are steps you can take as a homeowner to educate yourself about the Tarion Warranty and Registered Home Builders in Ontario.
If you haven’t visited Tarion.com be sure to spend some time getting acquainted with their website.
Educate yourself– Before you even think about hiring a home builder or a real estate lawyer take time to learn about home builds in Ontario from Tarion and be an informed home buyer.
This ensures you are confident moving forward and possibly be aware of any of those red flags.
1. Hire A Real Estate Lawyer
Lawyers are there to help the owner understand what they are signing up for.
Your lawyer will know if something is not right and will review all new home build documents and warranty offerings before you sign a contract to build.
2. Hire a Registered Home Builder
You will want to hire a registered home builder by making sure they are on the Tarion Home Builder Registry List.
If you have your new home built with a builder who is NOT registered you may not be covered under their warranty protection program.
3. Get the Warranty Information
Ensure you receive a Tarion Home Information Package from the builder which outlines what is covered under the home warranty and what is not.
If you ask and your home builder seems oblivious to Tarion, back away and contact Tarion with your concerns.
Oh, and read the information package. If you have any questions Tarion is always there to help.
4. Sign On The Dotted Line
Always make sure that any projects and work you get done or agree to are written, dated, and signed in a contract.
Never rely on their word (or mailbox flyer) which could turn ugly.
5. Check The Home Buyers Check-list
In situations such as buying a house, we have long since created a list of things to get done.
When it comes time to build our dream home our check-list is going to look quite different.
Now that we are educated about the Tarion Home Warranty and Home Builder Registry requirements we can make informed decisions.
Discussion Question: Have you ever made a claim against your builder with Tarion?
Share your comments below. Your experience might just help another home buyer.
This post is not sponsored and is of my opinion Mr.CBB only.
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