Deposit protection brings peace of mind to new home buyers

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Picture: NewsCanada

(NC) Is this the year you plan to take that bold leap and buy a new-build house or condominium unit? Prices of new homes have gone up in recent years, and so have the amount required for deposits. But there are two pieces of good news.

The first is that your deposit is protected by Tarion, the company that administers Ontario’s new home warranty program. The second is that coverage was increased and expanded to provide buyers with even more protection.

What is deposit protection for? Deposit protection covers you in cases where your builder goes bankrupt or fundamentally breaches your agreement, or where you exercise a statutory right to terminate the agreement.

Deposits on freehold homes. If the price of your new freehold home is $600,000 or less, your deposit is covered for up to $60,000. For example, if the price of the home you’re buying is $550,000 and you put down $60,000, your entire deposit is protected. If it’s over $600,000, you’re protected for 10 per cent of the purchase price, up to a maximum of $100,000.

Deposits on condominium units. Purchasers of condominium units benefit from two levels of deposit protection. To begin with, your deposit is protected by the trust provisions of the Condominium Act.?Under the act, your builder must hold your deposit money in a trust account. And if for some reason your deposit was not placed in trust, Tarion provides protection for up to $20,000.

Upgrades and extras. Deposit protection now covers?other? payments? related to your new home within the above limits, such as those you make for upgrades and extras.

Knowing that the money you put down is protected makes the thought of buying a pre-construction house or condo a lot less daunting. Find more information at tarion.com.

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