HCRA licenses, Tarion enrols
Since February 1, 2021, the Home Construction Regulatory Authority (HCRA) licenses every new home builder and vendor in Ontario. Tarion then enrols each home: a Qualification for Enrolment confirmation lets the builder sell, and an Enrolment Confirmation lets it build. Tarion will not approve enrolment without a valid HCRA licence.
When Tarion asks for security
Under section 3.8 of Tarion's Builder Agreement, the builder must provide security when Tarion requests it. Tarion lists:
- Cash collateral.
- Letters of credit.
- Surety bonds.
- Deposit trust agreements, guarantees and indemnities.
Tarion can set security per home or across the builder and its affiliates, ask for more after reviewing the builder, and require replacement security. For a condo project, security is generally limited to that project.
What Tarion protects for buyers
| Coverage | Limit (Reg. 892) |
|---|---|
| Freehold deposits (agreements from Jan 1, 2018) | Up to $60,000 on homes to $600,000; 10% of price, max $100,000, above that |
| Condo deposits | $20,000 plus interest |
| Delayed closing or occupancy | Up to $7,500 |
| Contract homes | Up to $40,000 |
Builders indemnify Tarion for what it pays. The security stands behind that indemnity.
Why builders choose surety
- A surety bond keeps the bank facility free for land and construction.
- One surety can also carry municipal security and excess deposit security.
- Underwriters look at the whole program, not one home at a time.
