Originally published on Slaw.
A panel of three Divisional Court Judges have affirmed that when a homeowner sells their home, they lose their standing to maintain a Tarion warranty claim under the Ontario New Home Warranties Plan Act (the "Act").
Ms. Blair took possession of her new condominium townhome in February, 2010. Thereafter she made a complaint to Tarion about insufficient heating in the home. Ultimately, Tarion ordered that duct modification work was required in all nine townhouse units in the complex.
Ms. Blair installed a gas fireplace in her home without Tarion's approval (to address the heating issue) and claimed compensation for the cost of her $17,000 fireplace. Her claim was denied and Ms. Blair appealed the decision to the License Appeal Tribunal.
During the appeal process, Ms. Blair disclosed that she had since sold her home and indicated that as part of the agreement of purchase and sale she and the purchaser had entered into a collateral agreement whereby Ms. Blair sought to continue her claim against Tarion.
Tarion successfully brought a motion to have the appeal dismissed for lack of standing and Ms. Blair appealed to the Divisional Court.
The Divisional Court reaffirmed the principles set out in one of its previous decisions which held that only current owners, and not former owners, are entitled to pursue a warranty claim under the Act. The Divisional Court also ruled that the Act prohibits owners from contracting out of the provisions of the Act, and therefore any purported assignment of the warranty from the current owners back to Ms. Blair was void.
The decision may be of particular interest to individuals who wish (or need) to sell their home while a warranty claim is still in the process of being adjudicated. The Divisional Court sets out a number of mechanisms that may be validly used by vendors and purchasers to account for yet to be adjudicated warranty claims.
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