Opinion: The Bank Of Canada's Subtle Housing Warning

Home Warranty Program

Explore what a Home Warranty Program covers in Canadian real estate, who manages it, and how it protects new homebuyers from construction defects.

Home Warranty Program

May 22, 2025


What is a Home Warranty Program?

A Home Warranty Program is a form of insurance that protects new homebuyers from defects in workmanship, materials, and major structural components for a set period after purchase.

Why Home Warranty Programs Matter in Real Estate

In Canada, many provinces require builders to enroll new homes in a licensed home warranty program, especially for new construction or pre-construction properties. These programs provide peace of mind to buyers by covering specific defects or issues that arise after occupancy.

Coverage typically includes:
  • One year for labour and materials
  • Two years for systems like plumbing, heating, and electrical
  • Seven years for major structural defects

Programs vary by province. In Ontario, for example, Tarion administers the mandatory new home warranty program. In British Columbia, it's overseen by BC Housing. Coverage may also extend to delayed closings and deposit protection.

Understanding a home warranty program helps buyers know what is covered, what’s excluded, and how to file claims if issues emerge. Buyers should keep all documentation, inspection reports, and correspondence related to their home in case warranty service is needed.

Example of a Home Warranty Program?

After moving into a new townhouse in Toronto, a homeowner discovers plumbing leaks. The issue is covered under the two-year warranty, and the builder arranges repairs through Tarion.

Key Takeaways

  • Protects buyers from defects in new homes.
  • Mandatory in several provinces for new construction.
  • Offers 1–2 years for materials and systems, 7 years for structure.
  • Varies by jurisdiction (e.g., Tarion in Ontario).
  • Important to document issues and submit claims on time.

Related Terms

  • New Construction
  • Pre-Construction Condo
  • Builder Warranty
  • Deficiency Inspection
  • Tarion

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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