CostYou've put down a substantial deposit on a pre-construction home, and the builder runs into serious financial trouble before the project completes.
Tarion deposit protection limits (Ontario)
| Freehold homes | Deposits protected up to a set maximum |
| Condominium units | Deposits protected up to a separate, typically lower set maximum |
| Amounts above the maximum | Not protected by Tarion |
How the protection actually works
Tarion is Ontario's new home warranty program, funded by builder enrollment fees, and it provides two distinct types of protection: deposit protection if a builder fails to complete or close, and warranty coverage for construction defects after you take possession. Every builder registered to sell new homes in Ontario is required to be enrolled, which is itself worth confirming before you put down a deposit on any pre-construction purchase.
The real limits worth knowing
Deposit protection is capped at a maximum dollar amount that's different for freehold homes versus condominium units, and it has historically been lower for condos — meaning a large deposit on an expensive pre-construction condo could exceed what's actually protected if the builder fails. This is a genuinely important number to check against your actual deposit size before assuming you're fully covered, rather than after something goes wrong.
Who to ask
Before signing any pre-construction agreement, ask your real estate lawyer to confirm the builder's Tarion enrollment status and walk through exactly what portion of your specific deposit structure would be protected under current limits. If your planned deposit exceeds the protected maximum, discuss structuring the deposit schedule differently, or factor that uncovered exposure into your decision explicitly rather than assuming full protection by default.
Understand your full financial exposure before committing — see your mortgage payment at final closing to plan your total budget around the purchase.