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5 red flags your new home is being built illegally
If you are buying a new home, you trust that it will be built properly, safe to live in and have all the features you've selected. But if the home has been built illegally, you could be at risk for construction defects and financial losses.
Anyone who wants to build and sell a new home in Ontario needs to be registered with Tarion and enroll each new home in the new home warranty program. As part of the registration process, builders must demonstrate their technical competence and financial viability. This helps ensure that these builders can fulfill the commitments they make to homebuyers in their purchase agreements.
When builders aren't registered and homes are not enrolled in the warranty program, there is greater risk of violations of the Ontario Building Code and the Workplace Safety Act, and buyers may be left in the dark about their rights.
The following red flags can help signal that you may be dealing with an illegal builder:
1. “You don't need a Tarion warranty because I offer my own.” With only a few exceptions (for example, homes built by owners or apartment buildings converted to condos), every new home in Ontario must be enrolled in the new home warranty program.
2. “I could enroll the home in the warranty program, but it would cost around $10,000.”Depending on the purchase price of the home, enrollment fees range from $385 to $1,800 plus applicable taxes.
3. “I built it for myself but decided to sell it instead.” Anyone can legally build their own home to live in themselves and it will not be covered by the statutory new home warranties so it does not need to be enrolled in the new home warranty program. But, if the home is being built and will not be occupied before being listed for sale, it will have statutory warranty coverage and it needs to be enrolled in the new home warranty program. It should be enrolled before construction even begins.
4. “You don't need a warranty — just don't put my name on the permit.” If you sign a contract with an illegal builder to build a home for you, they may suggest that you leave their name off the permit and indicate that you are building your own home to avoid having to enroll the home in the warranty program.
5. “You can't find my name in the Ontario Builder Directory because I don't need to be registered.” Being a registered builder and enrolling the home in the statutory warranty program isn't optional — it's the law. Registered builders are listed in the directory along with a 10-year history that includes numbers of homes built and warranty claims paid by Tarion on their homes.
