Make sure your contract builder is Tarion-confirmed

Building a home on property that you already own offers some distinct advantages and opportunities. You have freedom to customize its design and add personal touches that will heighten your living experience. ype of home is called a “contract home” because it is built on your own property, not on property being developed by a builder.

However, when you build a contract home, there are certain risks attached. For example, the relationship between you and the person you hire to build your new home can potentially break down. Sadly, there are too many cases where construction completely stops before the home is finished.

Fortunately, Ontario's new home warranty provides protection for consumers in situations like this. If your builder fails to substantially fulfill your contract, Tarion can provide coverage for your financial losses.

There are also some things you can do to help protect yourself even before you enter into a contract with someone to build your new home.

1. Make sure your builder is registered with Tarion. If they are not, they are operating illegally. You can confirm that the builder you want to hire is registered by visiting the Ontario Builder Directory at www.tarion.com.

2. Get a written contract. Verbal agreements can easily fall apart and can't be verified, making it difficult to prove what was agreed to between you and the builder.

3. Put everything down in writing, setting out the expectations and responsibilities of each person in the contract. Clearly state what you are getting built and how much it's going to cost. Attach plans, specifications, a construction schedule and document all change orders.

Get help from a real estate lawyer who has knowledge and experience with contract homes. A competent real estate lawyer will help you prepare the contract. The lawyer will also help you understand your rights and obligations under the contract and ensure that your interests are protected.

Of course, even a thorough contract cannot prevent agreements from breaking apart for a variety of reasons. So if your builder has stopped working on your home, you need to contact Tarion for help.

The first thing they will tell you is to stop all work on your home. Do not try to find someone else who can pick up where your builder left off, or fix defects that your builder may have caused. This is because if you submit a claim to Tarion, they need to assess your home in the state it was in when your builder stopped construction.

The next step is to submit a Financial Loss claim to Tarion. As they assess your claim, they will consider the terms of the contract with your builder, why the contract ended, what level of completion your home is at, and how much money you paid into it so far.

It's very important for you to retain a record of the payments you made to your builder, and Tarion will ask you for copies of cheques.

If you're able to show that your builder failed to substantially perform your contract through the builder's default, and that the payments you made to your builder exceed the value of the work and materials provided by the builder, Tarion may compensate you for the difference to a maximum of $40,000.

This will help you get back to building your new dream home.