Unfortunately, it was not all it appeared.
As Dean soon finds out, some deals are too good to be true. While the property was gorgeous on the outside, it was merely a distraction to cover up the real issues: the property is poorly insulated, the floorboards soon heave, the list goes on and on.
Have your own horror story? Feel free to share it in the comments!
This is just one horror story scenario of many. While there’s not a lot that can be done in resale properties, we here in Ontario have protection against shoddy workmanship in new homes and condos.
One of the biggest worries in real estate investing is protecting your investment. First and foremost, in the layers of protection you have at your disposal is home insurance. Insurance is there to protect you against sudden, unexpected damage, like a flood or a fire.
But there’s another important consideration you should be careful of: shoddy workmanship or defective home products. And that’s where Tarion steps in.
First-time investors or out-of-province investors may not be aware of the perks of Tarion. As of today, there are only five provinces that have government-mandated new home warranties: British Columbia, Alberta, Manitoba, Quebec, and Ontario.
These new home warranties (like Tarion) are there to protect new homebuyers against the negligence of developers and contractors. You always hope that your builder doesn’t cut corners, but it’s always good to protect yourself just in case.
Think of Tarion as another form of insurance. Regular home insurance is there to protect against sudden, unexpected damage. Tarion is there to protect you from shoddy workmanship.
And Tarion comes standard with all new condo purchases, you don’t need to apply for it or pay extra. How’s that for protection?
The most important aspect of Tarion is their one, two, and seven-year warranty. We’ll start by breaking these down for you here. Now, the Tarion coverage is fairly comprehensive, and we can only cover the basics here. For a more detailed breakdown of what is covered by Tarion, check out their website here.
In the first year of owning your new condo, you’re protected against unauthorized substitutions. The builder can’t pull a bait and switch on you. If they promised you granite countertops or other certain fixtures, they can’t surprise you at the last minute with something of lesser value or quality.
Moreover, the house must be move-in ready for your renters. Any defects can be reported to Tarion before moving in, and they will have the builder fix it for you. Dents in the wall before moving in? Covered. A pull or stain on your brand new carpet left by the workmen? Covered.
That said, Tarion is your final protection as a buyer, very often developers will fix these common issues no problem without you having to go to Tarion for recourse.
In the first two years, your new home is covered against accumulated water damage. Any defects caused by water damage or defects that could lead to water damage (such as caulking) are covered. Electrical, plumbing, and heating are all covered in these first two years as well.
And, finally, over the first seven years of owning your new home, you’re protected against major structural defects. Major structural defects would be anything that would cause the collapse of your home or would make your home unlivable, including foundation damage.
Long story short, when buying pre-development you’re already protected against shoddy workmanship and defective homebuilding products. Stack this on top of your owner’s insurance and you’re off to the races in terms of risk minimization.
For CONNECT Asset Management’s guide to risk minimization for condo investors, click here.
Again, if you’re curious about what else is covered by the Tarion Warranty check out their website and resources.
Unlike resale homes and condos, Tarion is a great advantage that new condo investors have at their disposal. Protecting yourself and your assets from the unknown should be every investor’s priority.
Tarion is another great defense mechanism for investors and home-buyers alike. While sudden and chaotic instances are covered by insurance, Tarion will protect buyers from builders and contractors who may try to cut corners or make a mistake.
Safe investing everyone!
Matt Elkind, Co-Founder CONNECT Asset Management