When you put down a sizable deposit on a brand-new house or apartment, the choice becomes very real and the investment becomes very real, too. The cost of down payments has also climbed dramatically in recent years. Fortunately, Tarion, the organization in charge of Ontario’s new home warranty and protection plan, safeguards your deposit. Better even, this deposit protection has recently been enhanced, giving you extra security and peace of mind while you search for your ideal house.
Learn about Ontario’s deposit insurance requirements below.
What is deposit protection?
If you make a down payment on a new house but cannot complete the purchase due to the builder’s bankruptcy or material violation of the purchase agreement, your deposit may be protected by a government agency. Even if situations like these don’t arise often, knowing you’re covered is comforting. Deposits are also protected if you cancel the sale due to a legal need. In the event that your builder does not or cannot repay your deposit, you may file a claim with Tarion.
Freehold property deposits
Tarion will insure your deposit up to $40,000 if you closed on a freehold property before January 1, 2018. If you signed a purchase agreement on a property on or after January 1, 2018, the amount of your down payment insurance will be proportional to the price of the home you’re buying. If the purchase price of your new freehold house is $600,000 or less, for instance, you won’t have to worry about saving up the whole $60,000. You get a cover for 10% of the purchase price, up to a maximum of $100,000, if the price is greater than $600,000.
Condominium Security Deposits
You may choose between two deposit protection levels when buying a condo. To begin, the Condominium Act mandates that condo developers hold all deposits in trust, guaranteeing the safety of your money. The developer has 10 days to reimburse your whole deposit in case of purchase agreement cancellation. Second, Tarion offers deposit protection of up to $20,000 if your builder does not refund your money.
Amendments and Conveniences
You may increase the resale value of your property by investing in various modifications and accessories. Wooden flooring, granite or quartz worktops, new tub surrounds, are all examples of popular renovations. Central air conditioning and a fireplace are two examples of desirable extras. Deposit protection now include payments made to your builder for upgrades and extras. Therefore, you can rest easy knowing your money is safe.
Which kind of deposits are not protected?
Tarion does not insure deposits paid to reserve or hold a new house or condominium unit before a purchase agreement is signed. If you do decide to make such a payment, you should request that the contractor keep the funds in escrow. Furthermore, make sure you have a receipt.
Buying a brand-new house or apartment complex is a substantial financial commitment. It’s comforting to know that your down payment is secure. Furthermore giving you one less thing to worry about while you look for your ideal house.