What is a Pre-Delivery Inspection and why do I need it?

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KPA Lawyers - June 20, 2020

In Ontario, all builders must register new build houses, condominiums and townhomes with the Tarion Warranty Corporation (“Tarion”), which is the corporation responsible for administering the Ontario New Home Warranties Plan Act (the “Act”). The Act requires that all new home builders be licensed to build and new homes be enrolled for the TARION warranty to apply. As a Purchaser, you are obligated to complete a Pre-Delivery Inspection or PDI as well as a Certificate of Completion and Possession. This is the first step to ensuring you can rely on the warranty available to you.

The PDI checklist is the inspection of a new build home conducted by the purchaser and a representative of the builder. You, as the purchaser, or your representative, tour the new home to ensure everything is functioning, finishes have been completed properly and everything is up to builders’ standards.

Typically, a PDI is done one or two weeks prior to your closing date, but it is not uncommon for a PDI to occur after the transaction has closed. Beyond ensuring your coverage under the Tarion warranty, not completing the PDI is usually always classified as a breach of your New Build Agreement of Purchase and Sale with the builder.

Should a builder refuse to bring a defect up to builder’s standard or the builder goes bankrupt, Tarion manages a guarantee fund to cover homeowners. Other coverage included by Tarion includes deposit protection, protection against defects in work and materials, protection against unauthorized substitutions, and protection against delayed closings or delayed occupancies without proper notice, to name a few.

Tarion requires strict adherence to notice and timelines in order for Tarion to intervene. Homeowners need to make a request to Tarion using the 30-Day Form, The Year-End Form, The Second-Year Form and the Major Structural Defect Form (third year to the seventh year). Late forms are not accepted.

If you have questions about real estate law in Ontario, feel free to speak with Barbara Kaye for free.

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