Tarion coverage for eligible residential condo conversion projects is expected to become available at the beginning of 2018, according to a regulatory proposal posted online by the Ontario government for public comment.
The move to extend new home warranty coverage to condo projects that incorporate pre-existing elements, such as churches or schools-turned-lofts, comes as part of a package of comprehensive legislative reforms contained in the Protecting Condominium Owners Act. The coverage will be limited to conversions from non-residential uses.
Under this change, builders will have to contribute to a fund set up to cover the cost of repairs associated with pre-existing elements anticipated in the first several years after the condo corporation is registered.
The province is considering setting a seven-year timeframe for anticipated repairs to be covered by this pre-existing elements fund in a regulation under the Ontario New Home Warranties Plan Act. As proposed, the clock would start ticking on this initial period from the date the condo corporation is registered through to its seventh anniversary. In phased condos with pre-existing elements, the clock would start ticking on this initial period from the date the phase is registered through to its seventh anniversary.
The province is also proposing to mandate that pre-existing elements funds be held in a trust account until registration and in a segregated account after registration, when the funds remaining for common elements repairs, along with any interest, would be released to the condo corporation.
The funds remaining for repairs to the pre-existing elements of a unit or proposed unit would be released differently depending on their amount. Funds of less than $10,000 would be released to the respective unit owner after registration, while funds of $10,000 or more would have to be held in a trust account for seven years before any remaining funds would be released to the respective unit owner.
Lastly, the province is proposing to amend the Building Code to require building officials to verify that residential condo conversion projects are enrolled in the warranty plan, and that their builders and vendors are registered with Tarion, before releasing permits.
These draft regulations are open to public comment until Sept. 25. Also out for comment, until Sept. 11, is a related bylaw proposed by Tarion which, if adopted, will appear as a regulation under the Ontario New Home Warranties Plan Act. The proposed bylaw includes eligibility requirements for residential condo conversion projects, as well as for their builders and vendors, and information about the relationship between the pre-existing elements fund and warranty coverage.
