Real Estate Litigation Articles

Home buyers not helped by Tarion Warranty Corp.’s purchase rider, says Court of Appeal

By Bob Aaron
Toronto Star contributing columnist.

Bob Aaron

Ontario’s highest court has levelled an unusually harsh blast at the Tarion Warranty Corporation, saying its compulsory addendum form which must be attached to every builder agreement is complex, difficult to follow and does not protect consumers.

The court’s comments were made in a decision involving Anthony Ingarra, who signed an agreement in 2016 to buy a house from Previn Homes. According to the Tarion addendum in the contract, the agreed firm closing date was January 11, 2018. On that date, the builder was unable to close since it did not have a municipal occupancy permit. It received it the permit the following day.

Ingarra also could not close since he was not in funds. His lender needed five more days to approve the loan, but when its appraiser inspected the home before closing, it was incomplete.

The Tarion addendum prescribes a compulsory framework for extending closings. When a builder cannot close by the contract’s firm closing date and fails to give notice of a delayed closing date, the Tarion addendum automatically sets a new delayed closing date 90 days later — unless the parties agree otherwise.

The lawyers for both parties ignored the addendum and agreed to extend closing to January 15 and then January 17.

On that day, Ingarra requested an extension of one more day, but the builder’s lawyers refused, terminated the transaction and forfeited the deposit.

Ingarra applied to the Superior Court to force the builder to close. Last May the judge ruled that the builder had breached the contract and ordered it to complete the sale.

Previn Homes appealed to the Court of Appeal, and its decision was released earlier this month.

Writing for a three-judge panel, Justice Peter Lauwers ruled that the builder’s termination was valid. Had Ingarra invoked the automatic 90-day extension, he could then have agreed to close sooner. His failure to do that was unfortunately fatal to his case.

In a highly unusual comment, Justice Lauwers wrote: “I reach this conclusion without satisfaction. The Tarion Addendum is not ‘consumer protective’ by any stretch of the imagination.

“The Tarion Addendum is a small-font, single spaced, convoluted and confusingly long and obscure document… It is a trap for the unwary, particularly the unwary lay person … ”

I cannot recall ever seeing a justice — of any Ontario Court — level such heavy criticism on a form like the Tarion addendum. In my view, it is totally justified.

Melanie Kearns, communications director for Tarion, emailed me to say: “We have reviewed the comments from the court about the Addendum and recognize the importance of helping purchasers understand their rights when they buy a new home. We are striving to use clearer and more accessible language in our communications with homebuyers, and will continue to make this a priority as we work to implement the recommendations of the Auditor General to improve consumer protection.”

Lisa Thompson, provincial minister of government and consumer services, is in charge of the Tarion Warranty Corporation, and needs to force an immediate resolution of this problem.

Bob Aaron is a Toronto real estate lawyer. He is Certified by the Law Society of Ontario as a Specialist in Real Estate Law.

He can be reached by email at, phone 416-364-9366. Visit his website