Yes, a custom home in Ontario can carry full Tarion warranty coverage, as long as a licensed builder constructs it under a contract on land you already own. Tarion calls this a “contract home,” and it receives the same 1-year, 2-year and 7-year statutory warranty as a home bought from a subdivision builder. If you build it yourself as an owner-builder, that coverage does not apply.
This guide explains how the Tarion warranty custom home owners receive actually works, where the Home Construction Regulatory Authority (HCRA) fits in, what is and is not covered, and the questions worth asking before you sign a building contract.
Key takeaways
- Tarion administers Ontario’s new home warranty; the HCRA licenses and regulates builders.
- A custom home built under contract by a licensed builder on your land is a contract home and is covered.
- Owner-built homes do not have a statutory warranty.
- Warranty protection on work and materials runs up to seven years, with a coverage limit of $400,000.
- Contract homes get financial loss protection of up to $40,000, not the deposit protection offered on freehold purchases.
- Always check your builder’s licence in the Ontario Builder Directory before you sign.
This article is general information, not legal or financial advice. Tarion rules change over time, so confirm current details with Tarion or a real estate lawyer.
Tarion vs the HCRA: Who Does What
Many homeowners assume Tarion handles everything to do with new home builders. Since February 2021, responsibility has been split between two separate not-for-profit organizations, and knowing the difference helps you know who to call.
Tarion administers Ontario’s new home warranty and protection program. It enrols new homes, backs the builder’s statutory warranty, assesses warranty claims, resolves disputes through conciliation and pays compensation from its guarantee fund when a builder fails to fix a valid claim.
The Home Construction Regulatory Authority (HCRA) licenses and regulates new home builders and vendors. It sets licensing standards, handles complaints about builder conduct, can impose conditions on or revoke a licence, and publishes the Ontario Builder Directory.
In short, Tarion protects the home and the HCRA regulates the builder. When you vet a builder, you will deal with the HCRA. When something goes wrong with the finished house, you will deal with your builder first and Tarion second.
When Is a Custom Home Covered by Tarion?
Tarion distinguishes between homes bought from a builder (freehold or condominium purchases) and homes built for someone who already owns the land. The second category is the one most custom home clients fall into.
Contract homes
Tarion defines a contract home as a home built on land you already own, under a construction contract between you and a builder. A typical example is a knockdown-rebuild on your existing Toronto lot, or a new build on a vacant lot you purchased separately. The builder must be licensed by the HCRA and must enrol the home with Tarion before construction starts.
Contract homes receive the full statutory warranty on work and materials. What they do not receive is the purchase deposit protection and delayed closing compensation that apply when you buy a home from a builder who owns the land. Instead, contract homes have their own financial loss protection, explained below.
The owner-builder exclusion
An owner-built home is one where the owner, rather than a builder, controls the construction. Owner-built homes are not enrolled with Tarion and have no statutory warranty, so the owner is responsible for any construction defects.
The label on the contract is not what decides it. Regulators look at the degree of control. Warning signs that a project may be treated as owner-built include the owner pulling the permits, hiring and directing the trades, supplying major materials or being on site to manage the work day to day. If you want warranty coverage, a licensed builder needs to be in charge of the build.
Planning a project around a design-build firm keeps that line clear. With a builder like Marvel Homes, design, permits and site management sit with one licensed team, which is how a custom home build stays a contract home from start to finish.
Tarion Warranty Custom Home Coverage: 1, 2 and 7 Years
Your warranty is provided by your builder and backed by Tarion. It starts on the date you take possession and covers work and materials up to a maximum of $400,000. Tarion warranty coverage is layered, so each period covers fewer items for a longer time.
| Warranty period | What it covers |
|---|---|
| 1 year | Home built in a workmanlike manner and free from defects in work and materials; fit to live in; compliant with the Ontario Building Code; protection against unauthorized substitutions of items specified or selected in your agreement |
| 2 years | Water penetration through the basement or foundation walls, windows and building envelope; defects in the electrical, plumbing and heating delivery and distribution systems; defects causing detachment, displacement or deterioration of exterior cladding such as brick or siding; Building Code violations that affect health and safety |
| 7 years | Major structural defects: defects in work or materials that affect a load-bearing element and cause structural failure or materially compromise structural integrity, or that materially and adversely affect the use of a significant portion of the home |
Tarion publishes Construction Performance Guidelines that explain how it decides whether an item, such as a cracked basement floor or a drafty window, is a warranted defect. They are worth reading before your pre-delivery inspection.
Financial Loss Protection for Contract Homes
When you buy a freehold home from a builder, your deposit is protected up to $60,000 on homes priced at $600,000 or less, and up to 10% of the price to a maximum of $100,000 on homes over $600,000. Those figures apply to purchase agreements, not construction contracts.
For contract homes, Tarion provides financial loss protection instead. If your builder fails to complete the work in your contract, you may be entitled to compensation for the difference between what you paid the builder and the value of the work and materials actually supplied. Tarion lists the coverage limit as $40,000.
On a luxury custom home, $40,000 is a small share of what you will pay over the course of a build. That makes the way payments are structured far more important than the warranty cap. In practice, you protect yourself by:
- Paying in stages tied to completed, inspected work rather than large up-front sums
- Keeping the 10% holdback required under Ontario’s Construction Act
- Choosing a builder with a long track record and a clean licence history
- Using a fixed price contract with a clear schedule of values and completion date
Our guide to avoiding common custom home building mistakes covers payment structure in more detail.
How to Check a Builder in the Ontario Builder Directory
Every builder who constructs a new home under contract in Ontario must hold an HCRA licence. Building without one, or failing to enrol the home with Tarion, is an offence. The quickest way to confirm a builder’s standing is the Ontario Builder Directory, a free public search tool run by the HCRA.
- Search by the builder’s legal or operating name, not just the brand you see on signs.
- Confirm the licence is active and note any conditions attached to it.
- Review the licence history and the number of homes the builder has enrolled.
- Look for warranty claim history, conciliations and any convictions or enforcement actions.
- Check that the company name on your contract matches the licensed entity exactly.
A long licence history with consistent enrolments is a good sign. Gaps, recent name changes or conditions on a licence are worth asking about directly. You can learn more about our own background on the Marvel Homes about us page.
The PDI, Warranty Forms and How to Make a Claim
Your builder must conduct a pre-delivery inspection (PDI) with you, or someone you designate, before you take possession. You can bring an expert along. The PDI form records anything damaged, missing, incomplete or not working, and it becomes evidence if a dispute arises later. Photograph everything.
Warranty forms and timelines
Many people still refer to the “30-day form.” For homes with a warranty start date on or after May 1, 2024, Tarion’s MyHome portal uses a new set of first-year forms that submit automatically.
| Form | Timing |
|---|---|
| Initial Form | Add items from day 1 after possession; submitted automatically on day 41 |
| Mid-Year Form | Add items from day 42; submitted automatically on day 183 |
| Year-End Form | Add items from day 183; submitted automatically on day 365 (only one accepted) |
| Second-Year Form | Any time during the second year |
| Major Structural Defect Form | After year two, no later than seven years from possession |
Homes with an earlier warranty start date follow the older 30-Day and Year-End form rules, so check MyHome for the dates that apply to you.
Making a claim
Report issues to your builder in writing first and give them access to investigate and repair. Submitting a form through MyHome notifies both your builder and Tarion. The builder then has an initial repair period, generally 120 days. If items remain unresolved, you can request a conciliation, where Tarion inspects and decides whether items are covered. The request fee is $250 plus HST, refunded if at least one item is found to be warranted. Conciliation windows depend on the form and your warranty start date, so confirm them in MyHome or on Tarion’s website.
What Tarion Does Not Cover
The statutory warranty is a limited warranty. It is valuable, but it is not insurance against every problem in a home. Tarion’s published exclusions include:
- Normal wear and tear
- Damage caused by improper maintenance or by the homeowner’s actions
- Damage caused by a third party
- Secondary damage caused by defects that are under warranty
- Supplementary or manufacturer warranties
- Elevators and HVAC appliances
- Specific defects you accepted in writing
- Damage from an Act of God
For luxury builds, note that items such as home elevators, high-end appliances and smart home equipment usually rely on manufacturer warranties. Keep those documents organized from day one.
Tarion enrolment fees
The builder enrols each home with Tarion and pays a one-time enrolment fee based on the sale price, excluding HST. Under the schedule effective September 1, 2025, fees range from $585 plus HST for homes up to $300,000 to $6,055 plus HST for homes over $4 million. Builders often pass this cost through in the contract price, so ask how it is handled. Fee schedules change, so confirm the current figure with your builder.
Questions to Ask Your Custom Home Builder
A good builder will answer these without hesitation. Ask them before you sign, and get the important answers in writing.
- What is your exact HCRA licence name and number?
- Will you enrol my home with Tarion as a contract home before construction begins?
- Who will apply for the building permit and manage the trades on site?
- How is the payment schedule structured, and how is the statutory holdback handled?
- Is the contract a fixed price, and what can change it?
- Is the completion date guaranteed, and what happens if it is missed?
- How do you handle warranty service requests after we move in?
- Can I speak with past clients about their warranty experience?
Builders with a defined, documented process make these answers easy. You can see how we structure each stage on our custom home building process page.
Frequently Asked Questions
Does Tarion cover custom homes in Ontario?
Yes, if the home is built under a contract by an HCRA-licensed builder on land you already own. Tarion calls this a contract home, and it receives the same 1-year, 2-year and 7-year statutory warranty as a home bought from a builder. The builder must enrol the home with Tarion before construction starts. Homes built by the owner without a licensed builder are not covered.
Is an owner-built home covered by the Tarion warranty?
No. Owner-built homes are not enrolled with Tarion and have no statutory warranty, so the owner is responsible for construction defects. Whether a home is owner-built depends on who actually controls the construction, such as who pulls permits, hires trades and supplies materials. If you want warranty protection, a licensed builder needs to manage the project.
How much does Tarion cover for a contract home?
The warranty on work and materials has a coverage limit of $400,000 and runs up to seven years from possession. Separately, contract homes have financial loss protection of up to $40,000 if the builder fails to complete the contracted work. Contract homes do not receive the purchase deposit protection or delayed closing compensation that apply when buying a freehold home from a builder.
How do I check if my builder is licensed in Ontario?
Search the builder in the Ontario Builder Directory, the free public tool run by the Home Construction Regulatory Authority. Confirm the licence is active, check for conditions, and review the builder's history of enrolled homes, warranty claims and any convictions. Make sure the company name on your contract matches the licensed entity exactly.
What is not covered by the Tarion new home warranty?
Tarion excludes normal wear and tear, damage from improper maintenance or homeowner actions, damage caused by third parties, secondary damage from warranted defects, elevators, HVAC appliances, supplementary or manufacturer warranties, defects you accepted in writing and Acts of God. Appliances and specialty equipment usually rely on manufacturer warranties instead.
Build With a Licensed, Award-Winning Toronto Builder
A new home warranty in Ontario only protects you if the right builder is in charge. Marvel Homes Development has more than 30 years of experience building luxury custom homes in Toronto and the GTA, and won the BILD/RenoMark award for Best Custom Home Over $2 Million.
Every project includes in-house architectural design, full project management, a fixed price contract, a guaranteed completion date and Tarion warranty coverage. If you are planning a custom home or knockdown-rebuild, contact Marvel Homes to talk through your lot, your goals and how your warranty will work.