Q I have purchased a resale condominium that was recently closed and was not occupied by the original owner. The building is only six months old but I am concerned that the Ontario New Home Warranty Plan Act and the Tarion Program will not cover me for problems or deficiencies that might pop up in the future. The building already has apparent problems from drainage to rust on the balconies. What is your take on this?
A You raise a very interesting issue because I just spoke with the people at Tarion recently and this is a grave area of concern for them. The general perception is that the warranty runs with the property as long as it is not occupied by the original owner. However, this is not as straightforward as it may seem.
You have to determine that that unit has never been occupied by the purchaser and your now vendor. Your lawyer should ensure this by way of an affidavit by the vendor and also make sure that the vendor is registered with Tarion as a “reselling licencee.” Without this registration, the warranty will not transfer and you will not be protected by Tarion for defects that occur.
Not only that but the reseller, if he is purporting that the residence is covered under the warranty, can be subject to fines from Tarion. The largest concern is not the enrollment fee ($350) as a reselling licencee or indeed the registration of the vendor but the fact that you are not covered under the Tarion program if they have not registered: Even if the property was never occupied.
So if your roof starts leaking two years into the enjoyment of your new home that you purchased from someone who purchased it new but only owned it for a few months and never lived in you may have no recourse but to sue the former owner — who by this time could be living anywhere.
Check out tarion.ca.
Jeffrey Cowan is the principal with Cowan Taylor and McGee, Barristers & Solicitors. The information in this article should not be relied upon as legal advice.
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