By Kavita Pandya
Robins Appleby
Imagine saving for years to finally invest in your dream home, only to discover that the builder wasn’t licensed to sell or construct in Ontario – and you’ve lost your entire deposit. Unfortunately, this is not a rare occurrence. It’s a growing issue that’s shaking buyer confidence in Ontario’s pre-construction housing market. Purchasers, often already stretched financially, are growing wary due to rising costs, delays and cancelled projects.
To address these concerns and curb illegal building activity, Tarion, Ontario’s new home warranty authority, has introduced a new notice requirement for buyers of newly built freehold homes. As of July 1, 2025, purchasers are encouraged to notify Tarion of their purchase, within 45 days of signing a purchase agreement. This step increases transparency and helps protect consumers by ensuring their investment qualifies for full deposit coverage.
This change is a win for both consumers and legitimate builders. For buyers, early registration ensures your deposit is fully protected. For licensed builders, it levels the playing field by helping regulators detect and stop unauthorized operators. With purchasers now required to disclose their home transactions, it will be much easier to flag unlicensed activity early. For too long, honest builders have unfairly faced scrutiny and reputational harm due to the actions of a few rogue or inexperienced players. By increasing transparency, this initiative helps safeguard the hard-earned trust and standing of professionals who follow the rules.
Current deposit protection program for freehold homes
Currently, if you buy a newly constructed freehold home, Tarion protects your deposit under the following limits:
- Agreements signed before Jan 1, 2018: Up to $40,000
- Agreements signed on or after Jan 1, 2018:
o Up to $60,000 for homes priced at $600,000 or less
o 10 per cent of the purchase price, up to a maximum of $100,000, for homes more than $600,000
What’s changing?
Under Ontario Regulation 17/25, as of July 1, 2025, purchasers of new freehold homes (including homes on parcels of tied land) are encouraged to register their agreement with Tarion within 45 days of signing. The purchaser can register their agreement in just a few clicks using this link.
As of Jan. 1, 2026, purchasers who provide such notice within 45 days, will qualify for the maximum amount of deposit coverage currently available under the warranty program. Those who don’t register in time will still qualify for the deposit protection, but subject to $10 million annual sub-limit shared among all late-registered purchasers.
To clarify, claims from the purchaser who did not register their purchase agreement within 45 days will be aggregated at the end of each calendar year. If the total is less than the sublimit, their deposit coverage limit will not be impacted, and their claim would be subject to the current limits. However, if the aggregate claims are more than the sublimit in a calendar year, their compensation limit will be based on a proportional share derived from the difference between the aggregate claims and the sublimit. For example, if 110 purchasers submit claims for $100,000 in a year, then the total deposit claims under the sub-limit for that year are $11 million. Therefore, these purchasers, who did not provide proper notice, would then receive up to $90,909 in coverage each.
Why this change?
Illegal building and selling isn’t just a regulatory issue – it’s a serious threat to homebuyers. Purchasers, who unknowingly invest in unauthorized projects risk losing their entire deposit, with little to no recourse. Until now, many of these illegal transactions have remained hidden for years, only coming to light far too late for regulators to intervene effectively.
Tarion’s new requirement aims to change that. By requiring purchasers of newly constructed freehold homes to register their agreements within 45 days, Tarion will be able to verify in real-time whether a builder is properly licensed. If not, they can work swiftly with the Home Construction Regulatory Authority (HCRA) to stop illegal sales before buyers are harmed — not years after the damage is done.
Unlike condominium buyers, purchasers of new freehold homes have had far fewer protections. The Condominium Act requires all deposits to be held in trust by an accredited trustee, ensuring funds are secure. On top of that, Tarion insures the first $20,000 of condo deposits. Builders must also secure insurance for any amount beyond $20,000, which can only be released under strict conditions.
In contrast, freehold home deposits are paid directly to the builder or vendor – with no trust account and no guaranteed third-party oversight. If the builder goes bankrupt or breaches the agreement, the buyer’s deposits are at risk.
By introducing this notice requirement, Tarion hopes to strengthen consumer protection. Early registration will help identify and track transactions sooner, allowing authorities to detect illegal activity and act before buyers are left in a financial nightmare.
It’s important to note that these changes apply only to purchasers of new freehold homes. There is no change to deposit protection for condo buyers or post-possession coverage for either type of purchase.
Final thoughts
Buying a new-build home is likely one of the biggest financial decisions a purchaser will ever make; and knowing their deposit is protected, offers peace of mind. While Tarion’s new notice requirement is a positive step forward, it’s not a silver bullet. Illegal builders often skip including Tarion documentation altogether, leaving unsuspecting buyers in the dark about their rights. That’s why it’s critical for the entire housing industry – from builders and realtors to lawyers and mortgage agents – to understand these changes and clearly communicate them to their clients.
If you’re buying a new freehold home after July 1, 2025, don’t wait. Register your agreement within 45 days – and protect your investment.
Kavita Pandya is Associate Lawyer at Robins Appleby. robinsappleby.com, kpandya@robapp.com.
