Developing Ontario condos? Here’s what to know about getting a Tarion bond
50+ years of growth. Depending on your perspective, 50 years may be a long or a short time. So if you are developing, building or selling Ontario condos, your industry has existed for only 50+ years. And in that relatively short time, condo projects in Toronto, the GTA and throughout Ontario have transformed how people live in the province. Certainly, everything changed in 1967 when buying condos became possible.
“A half-century ago, condominiums were an obscure, novel concept in home ownership. But 50 years later, while it remains for many the only hope of affordable home ownership in Toronto’s red-hot housing market, the tower-of-glass luxury condo has also become a dwelling of choice for a new more urban generation, radically remaking entire Toronto neighbourhoods in the process.”1TheGlobeandMail.com: Toronto’s five decades of condo growth, mapped
Flash forward to the 2010’s and Toronto and the GTA would see 109,497 units added. And once again, some changing times in the condo marketplace.
- “With condo prices up 10 per cent year over year in April of 2010, the CEO of Royal LePage warned of “irrationality” in the market.
- Sales in Toronto would cool that summer, for the first time since 1994. But this was a blip. Developers kept unveiling plans for gleaming towers on underused sites.
- Thousands of new condo-dwellers were living in downtown neighhourhoods, increasingly walking or cycling to nearby jobs. Condo sales outside central Toronto, in the so-called 905 suburbs, were also smashing records.
- Government tinkering with mortgage rules did not stop the boom. In April, 2017, Ontario announced a suite of measures, including a tax on “non-resident” buyers similar to one imposed in B.C., to cool the market.”2
Developing, building and selling condo projects in Ontarios require complex planning and project management. From securing land and permits to architectural drawings and plans to breaking ground and beyond, risk exposures are everywhere.
If you are looking to secure a Tarion bond for your condo projects, we can help. Our business insurance brokers understand the marketplace and the specific requirements you face. We know how to deliver Ontario builders risk insurance products that will cover the specific exposures you face.
Most importantly, get builders risk insurance options ALIGNED.
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With millions of dollars at risk, what are your potential financial and warranty obligations to Tarion?
You’re making thousands of decisions before a gold ground-breaking shovel is put into the ground. And you are spending thousands, often millions of dollars. In other words, builders risks in Ontario are significant and complex. The Ontario building industry is also subject to specific government regulations and requirements. For example:
“Tarion is a not-for-profit consumer protection organization established by the Ontario government to administer the province’s new home warranty program.
For over 40 years, Tarion has served new home buyers and new home owners by ensuring that one of their life’s biggest investments is protected.”3
Therefore, a Tarion bond for Condo Projects is nothing short of essential. This is because:
“Tarion Warranty Corporation (“Tarion”) carries out assessments of builders to ensure that registered builders are able to meet all financial and warranty obligations. Builder Bulletin 28 defines the parameters of that process and the amounts and conditions for the security, which may be required of builders as a condition of registration.”4Tarion.com: Builder Bulletin 28: Tarion Requirements for Receipt and Release of Security
Most importantly, Tarion’s March 2009 Builder Bulletin about Tarion Requirements for Receipt and Release of Security updated and replaced a six-year-old revised document.
And as such, Tarion notes “This response is provided for general information purposes only and does not constitute legal or other professional advice.” 5
Understanding what you are buying when you are purchasing builders risk insurance is important. So is knowing what your Tarion bond will cover is nothing short of essential.
Above all, it’s important to understand what your obligations to Tarion are when you are building. This is why understanding government regulations, builders risk as well as available insurance solutions is so important.
“Tarion Warranty Corporation (“Tarion”) carries out assessments of builders to ensure that registered builders are able to meet all financial and warranty obligations. Security is used by Tarion to mitigate losses resulting from builder failures so that funds from registration and enrolment fees are available to pay for ongoing warranty claims and those caused by unforeseen circumstances.”6
If you are seeking Tarion bonds for condo projects, you need to work with an Ontario broker who understands the nuances of builders risk insurance products. We are that team of brokers!
And with a National Operations headquarters in Cambridge, Ontario we also have an office in Toronto. Our team of commercial insurance experts understand the nuances of builders risk and can answer questions you may have.
Contact an ALIGNED Insurance broker now to connect with knowledgeable experts and the builders risk insurance products – including a Tarion bond for Condo Projects – that you need to move forward.
How Ontario businesses can use surety bonds to fulfill Tarion requirements
Insurance builds upon trust. Similarly, buildings build upon trusted relationships. For example, the relationship between developer and architect, between construction lead and apprentices, between financial partners and banks.
The information that follows explains a few of the requirements that Tarion has of vendors and builders of condo projects. These extracts provide some insights into financial resources that are required to secure a new build. The most current and comprehensive information can be found on Tarion.com.
Some highlights can be found below.
- “Once Tarion has reviewed the application, they will ask for security (acceptable standard form is either Letter of Credit or Surety Bond) to be posted from the VENDOR and not the BUILDER.
- This type of bond is non-cancellable and only Tarion is able to cancel it.
- Security will be maintained until all the common elements and warranty issues are confirmed and resolved (security can be held by Tarion for up to 7 years after condominium registration).”7
Furthermore, “if the developer is approved for the Tarion Bond, we will require the following security:
- First ranking charge on the deposits contained in the Trust Account (registered under the PPSA)
- Collateral Mortgage equal to the face amount of the bond
- Indemnity Agreement (personal and corporate)
- Registration of security can take from six weeks and up (depending on complexity of corporation structure, beneficial ownership, etc.).“8
Most importantly, the ALIGNED Insurance brokers of Ontario can deliver the surety bond you need to fulfill the Tarion requirements. We understand the marketplace and can help you secure the best option for your next condo project development. We are here to help you move forward with your projects and vision.
Above all, aligning value and choice is what we do for our more than 1,700 clients across Canada. In the same vein, receiving positive reviews lets us know we are succeeding in our mission.
To sum up, contacting an ALIGNED broker is just the start of getting a better insurance experience.
In short, you can get a FREE surety bond insurance quote started now.
Use our online form.
In conclusion | Working with us can help you move your business forward
Firstly, building isn’t easy. Secondly, maintaining momentum is hard. In addition, being in the regulated industry is nothing short of complex. This is why we are 100% focussed on business insurance.
Most importantly, we deliver a different insurance experience. And there are many reasons why people are writing positive Google reviews about ALIGNED Insurance. Above all, recommendations mean that the support we deliver, the insights we provide and the products we offer are making a difference.
Here are a few recent Google reviews from Toronto clients:
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- I was looking to get an insurance for a Property Management company. I contacted 7 insurance companies/brokers and none of them were able to provide me with a quote. Andrew managed to provide me with a good quote in rapid timeline which was essential for me, he was very proactive, answered all of my questions. The whole process was smooth. I recommend him highly.” – ALIGNED Toronto client
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And some Google reviews from Cambridge, Ontario clients:
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To sum up, we’re delivering different business insurance experience to every single client we support across Canada. That is to say, we’re proud to do what we say we are going to do when we say we are going to do it.
In conclusion if you are looking for choice, options and value for your next condo project, you’ve landed on the right page. ALIGNED Insurance brokers of Ontario are here to help you with developing your next project. In short, we are ready to help you get the coverages you need to succeed.
We’re here to help you find the BEST commercial insurance…
Our team of insurance brokers is available to help answer any and all questions you might have about all of our commercial insurance products. If you have a question about business insurance, are uncertain about what a particular insurance coverage term means, or simply want to find commercial insurance that directly aligns with your needs, don’t hesitate to call us toll-free at 1-866-287-0448.
Source(s): 1,2 TheGlobeandMail.com: Toronto’s five decades of condo growth, mapped ; 3 Tarion.com: About 4,5 Tarion.com: Builder Bulletin 28: Tarion Requirements for Receipt and Release of Security ; 6 Tarion.com: Security Bulletin ; 7Tarion.com
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