The Tarion Process

The Ontario New Home Plan – How to Practically Manage and Navigate the System for Condominium Corporations. Part 3 of 3: The Tarion Process

The process for Tarion is time-consuming to say the least, and it begins well before the corporation even exists.

The developer must ensure that it is registered under Tarion in order to be able to provide Tarion warranties. Once the unit is ready, Tarion coverage kicks in for the individual unit owner and the corporation. It is important for a condominium corporation to understand that there is a process that governs the unit. In order to ensure that rectification of deficiencies is done in a timely way, the corporation should be guiding unit owners to develop a communication strategy with Tarion.

For the Corporation, the process begins with hiring an engineer to prepare a Performance Audit Report (PAR). The PAR must be created within the 6th to the 10th month of the Corporation’s life and it must be filed by the last day of the 11th month of the first year (that is in the year beginning from the date of registration). While supplements are permitted by Tarion, it is important not to get the date wrong. Most professionals who work in this area are quite aware of how the actual statute provisions under Section 44 of the Condominium Act (Ontario), 1998 are drafted. This is the beginning of the reporting for first year warranties.

First year warranties provide the broadest range of claims available to a condominium corporation. Thus, the first year report must be fulsome because the second and seventh year reports are only with respect to specific items. Workmanship must be dealt with in the first year performance audit, for example.

Once the Board has reviewed and approved the first year PAR and it is filed with Tarion, Bulletin 49 kicks in.[1]

Some of the best practices for managing the process are:

1. If you have emergency construction deficiencies that must be rectified do not start rectifying them right away. Immediately write to Tarion, copy the developer, and let them know of the deficiency and why it is an emergency. Then obtain Tarion’s permission to go ahead and rectify. Do not act hastily, as you may vitiate the warranty. What does this mean? It means the developer will say: “you touched it, so we are not going to cover it under the warranty plan” and Tarion will back them up. It is important to remember that developers always get the first ‘kick at the can’ at rectification. Thus, preserve their right to rectify, but put the pressure on them to get it done within a reasonable time frame where specifically there is an emergency. With this said, do not abuse the process by calling everything an “emergency.” There may be boards who believe that the developer has failed to deliver what they actually promised from the artist renderings but this does not constitute an emergency.

2. Eliminate those things that are not really important; paint splatters can be annoying, but they are really not worth the time of Tarion and the Corporation and its professionals fighting over. At Elia Associates, we guide our clients through how to actually identify what the key issues are and how to work cost effectively with professionals to deal with them.

3. Know the key deficiencies to watch for: water penetration issues, electrical deficiencies, and infrastructure issues such as elevators and generators to ensure that they are installed properly. Make sure your engineer/PAR writer goes to the guts of the Corporation. Even though it’s a visual inspection, they should know the Building Code and there are certain things that should stand out to them right away.

4. Remember, failure is key. I also think it is really important to pay attention to exterior finishing systems. In this day and age of stucco, it is really important to understand how stucco is to be installed

5. Make sure everything is reported.

6. When you file your PAR, make sure that the Corporation speaks to its engineers about ensuring that things which have been installed are installed according to the manufacturer’s guidelines, so that the corporation gets the benefit of warranties. The underlying message here is to understand that where things are not installed within the parameters of the manufacturer’s installation guides it means that you would actually potentially be the victim of a shortened lifespan of a capital asset.

7. Do a Three Hour Tour. If possible have a board member at some time or another actually accompany the engineers for part of their tour. Physically taking board members around to highlight specific issues that are of concern can benefit the dialogue with Tarion.

8. Communication Strategy:

a. Keep Tarion apprised of all your communications with the developer by copying them on the correspondence so that they know that the Corporation has been proactive.

b. Make sure your unit surveys are done. That requires a good communication strategy with owners - educating them as to why and the importance of these actual surveys that are put out by the engineering firms or qualified companies.

9. Make sure you use somebody reputable to do your PAR that has worked extensively with condos. With the growth in the condominium industry, there are a lot of people who are “qualified” and believe that they know condos well. Knowing buildings well is not the same as knowing condos well. Knowing a condo well means that you also understand the statutory framework, the wear and tear, and the dynamics that a condo is subjected to both physically and as well the parameters within which it is actually created. This means that a well-educated reserve fund study or performance audit writer will know exactly what the Declaration, by-laws and rules mean to a condominium corporation.

10. Really understand your component inventory. The performance audit is one of the material steps in the Tarion process; it is not the only step in knowing how a building is run. The component inventory that a good reserve fund study or performance audit writer will do really identifies all the capital assets that make up your building. This is important because you need to know what will break down, and that your performance audit writer or reserve fund study writer hasn’t missed anything. I have seen a few studies where major components have been missed by the engineers. This is an unfortunate circumstance.

11. If you are able to get your hands on it, see if you can find Bulletin 19. This adds a tremendous amount of value to you because it shows you the concerns of the engineer that was hired to do the Bulletin 19 midway through construction. When your performance audit is done once the drywall is up, you don’t know what is behind the walls; the Bulletin 19 does actually show you what was behind the walls before the drywall was up and what the concerns were, and this will provide focus. 

[1]  http://www.tarion.com/New-Home-Builders/Policies-and-Guidelines/Builder%20Bulletins/b49final_june3.pdf

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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