Tarion Bonds
Ensuring Compliance and Protecting New Home Buyers in Ontario
What Are Tarion Bonds?
Tarion Bonds are surety bonds required by the Tarion Warranty Corporation, which regulates new home builders and ensures that they fulfill their warranty obligations under Ontario’s new home warranty program.
These bonds act as a guarantee that builders will meet their legal responsibilities, including providing warranty coverage for structural defects, delayed closings, and deposit protection.
Benefits of Tarion Bonds
Regulatory Compliance
Tarion bonds are a legal requirement for new home builders in Ontario, ensuring that builders meet their warranty obligations.
Protection for Home Buyers
These bonds guarantee that homebuyers are protected in case of builder default or failure to meet warranty commitments.
Builder Credibility
Having a Tarion bond in place demonstrates a builder’s commitment to high standards and regulatory compliance.
Risk Mitigation
Provides financial compensation if a builder fails to fulfill their warranty obligations.
How Tarion Bonds Work
Application Process
Builders apply for a Tarion bond through a surety provider. Financial stability and past project performance are usually evaluated.
Underwriting
The surety provider assesses the builder’s ability to meet their warranty obligations based on their financial and operational history.
Issuance
Once approved, the bond is issued, guaranteeing the builder’s compliance with Tarion’s warranty program.
Warranty Obligations
Builders provide new home warranties covering a range of issues, including construction defects and delayed closings.
Claims
If a builder defaults on their warranty obligations, Tarion or homebuyers can make a claim against the bond.
Why Insurance Brokers Should Offer Tarion Bonds
Meet Regulatory Requirements
Help builders comply with Ontario’s stringent regulatory requirements for new home construction.
Comprehensive Protection for Buyers
Ensure that new homebuyers have the financial protection they need.
Build Strong Relationships with Builders
Offering Tarion bonds helps brokers establish long-term relationships with builders who need reliable bonding solutions.
Expert Tarion Bonding Solutions for Builders
Whether your clients are established builders or just entering the market, Tarion bonds are essential for protecting homebuyers and maintaining compliance. Contact our team to learn more about how we can help your builder clients secure their bonds.
FAQs about Tarion Bonds
Who needs a Tarion bond?
All new home builders in Ontario must secure a Tarion bond to comply with Tarion Warranty Corporation’s regulations.
What does a Tarion bond cover?
The bond covers warranty obligations, including structural defects, delayed closings, and deposit protection.
How long does it take to obtain a Tarion bond?
The application process varies, but it typically takes a few days to a week, depending on the builder’s financial background.
Can a builder operate without a Tarion bond?
No, Tarion bonds are mandatory for all new home builders operating in Ontario.
What happens if a claim is made on the bond?
If a claim is made, the surety compensates the homebuyer or Tarion for any financial loss,
and the builder must repay the surety.
