What is a Tarion Warranty Bond?
The Tarion Warranty Corporation (“Tarion”) is a not for profit corporation that was established in 1976 by the Ontario New Home Warranties Plan Act. It ensures that builders abide by the Act and steps in to protect consumers when developers fail to perform their obligations under the Act. All residential developers must be registered with Tarion to build and sell condominiums in Ontario.
Tarion requires that all condominium developers post security in order to protect the purchaser’s interests prior to the sale of condominium units for all projects. A minimum amount of $20,000 per unit must be provided to Tarion to protect purchaser’s deposits as well as provide the warranty protection required by Tarion; however, Tarion will often require a higher per unit amount from newer or less experienced developers.
To put it into context, if you are building a 200-unit condominium, at a $20,000 per unit risk assessment, you would be required to post $4 million dollars in security to Tarion.