Does A Selling Homeowner Lose Tarion Warranty Rights Upon Sale of Home
Recently the Ontario Divisional Court confirmed that, yes, a homeowner who sells his or her home loses standing to maintain a claim or appeal under the Ontario New Home Warranties Plan Act.
The owner took possession of her condo and made a warranty claim regarding heating issues. The owner made a further claim for compensation relating to the installation of a gas fireplace that she claimed was installed to remedy the heating issues. That installation was done without Tarion approval and her claim to Tarion was denied. She appealed. Subsequently, the owner sold her condo and added a collateral written, signed agreement to the Agreement of Purchase and Sale which allowed her to continue to pursue the appeal for compensation relate to the fireplace installation.
Divisional Court ruled that the former owner had lost her standing to pursue the appeal when she sold the property. The Court then rejected the argument that the purchasers had assigned the right to pursue the appeal through the use of the collateral agreement.
In rejecting the former homeowner's arguments, Divisional Court provided the criteria that must be addressed to ensure that unresolved warranty claims continue to be valid, being: 1) the claim must be pursued by the current owner of the home and 2) the claim must allow the possibility of the builder to remedy the defect rather than only paying compensation.
The Court also provided some analysis as to how a former owner might be appointed agent for the current owner in order to pursue the claim.
The Lesson: Selling homeowners must be advised that, in the normal course, they lose the rights to any existing Tarion warranty claims. The statutory regime does not allow them to retain these rights by a simple assignment. Further legal advice should be sought.
The content and the opinions expressed here is informational purposes only and does not constitute legal or professional advice. Nor does reading or commenting on it create a lawyer/client relationship with the author. I encourage you to contact me directly at adrianlawoffice@gmail.com if you have specific legal questions or concerns.
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