New Home Clauses in Ontario: Tarion Addendum, NEW-1 to NEW-3

Last updated 11 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · For Ontario registrants · 10 min read

A builder file is not a resale file with a different logo

The thing that ends badly on a new home file is almost never the house. It is a date, a form, or a rebate. A buyer misses a payment window by under an hour and the builder terminates. A buyer signs an HST clause they did not read, decides to rent the unit out, and receives an invoice from the builder for the rebate amount. An agent hands a client a builder’s agreement with an Addendum that somebody has edited, and nobody notices until a lawyer does.

This happens to competent agents because builder agreements are drafted by the builder’s counsel, arrive in a sales trailer with a signing deadline attached, and look superficially like the resale documents you know. The OREA new home clauses are a small part of the picture.

The Tarion Addendum is mandatory and it is not yours to edit

The warranty legislation Tarion administers — the Ontario New Home Warranties Plan Act — requires a new home agreement to carry Tarion’s published Addendum. It goes in as Tarion issues it, fully completed, with nothing revised out of it, and the legislation treats it as part of the agreement whether or not anyone attaches it properly. Builders obtain the current forms from Tarion directly.

What this means for you is narrow and important. You do not draft it, you do not amend it, and you do not accept a version that has been tidied up. If the Addendum in front of your buyer looks edited, incomplete, or is a form you have not seen before, that is a question for the buyer’s lawyer before signing rather than after. The Addendum is also where the critical dates live — the ones that govern delay, extension and the buyer’s rights if the closing moves. I read it first on every builder file, before the agreement itself.

Tarion’s own materials are the authority on the current form and on deposit protection for new home purchases. Coverage exists and the terms change; confirm the current position there rather than repeating what an agent told you in 2019.

NEW-1 and NEW-2: registration and the promise to finish

NEW-1 (Builder Registered) is a knowledge-qualified seller representation and warranty that this home and this builder both hold registration under the new home warranty plan, with the supporting documents attached as a schedule and the warranty expressed to survive closing. Two practical notes. The clause uses the plan’s older name, which is what you will see in the book; the substance is warranty registration. And builder registration and home enrolment are two separate things — a registered builder does not guarantee that this particular home has been enrolled. Ask for both documents, and ask early, because an unregistered builder is not a drafting problem, it is a stop-work moment.

NEW-2 (Completion of Construction) commits the seller to finishing the house, any further structures you itemise, and the grounds to a workmanlike standard, measured against a specifications schedule you attach. The clause is only as good as that schedule. “In accordance with the specifications” attached to a schedule that says “builder’s standard finishes” is an argument waiting to happen, and the argument arrives at the pre-delivery inspection when your buyer is standing in a house they have already paid for.

On a custom or small-builder deal, the schedule is the work: model and grade of the mechanicals, flooring, counters, exterior finishes, driveway, grading, landscaping with a season attached, and what happens to anything weather delays. Vague specifications favour whoever holds the keys.

NEW-3: the HST clause that turns investors into debtors

This is the clause I want every agent selling pre-construction to understand, because the harm lands on the buyer months after you have been paid.

NEW-3 states the purchase price as including HST, and then does three further things. It assigns and transfers the buyer’s rights to available rebates, refunds and credits to the seller and appoints the seller to apply for and collect them. It has the buyer represent and warrant that they, or one of their relations, will occupy the property as a primary place of residence on completion, and sign a declaration to that effect on a form the seller provides. And it provides that if the buyer breaches that warranty, so that the rebate becomes unavailable, the buyer pays the seller an amount equal to what would have been obtained.

Read that last sentence again with an investor client in mind. A buyer who signs this and then leases the unit out, or closes with a different intention than they warranted, has agreed to write the builder a cheque. The word “relation” is not loose either. Its meaning comes from the federal tax legislation, and it is narrower than everyday usage: on the blood side it stops at parents, children and other descendants, and siblings. Marriage brings in a spouse and the people connected to that spouse by blood or adoption. Partners count, including common-law, and so do former spouses and former common-law partners. A cousin does not qualify. A friend does not qualify. A numbered company does not qualify.

Builder deadlines are enforced literally, and limitation clauses are enforced too

Agents who came up in resale carry an instinct that small delays get worked out. On builder files that instinct is wrong often enough to be dangerous. In 3 Gill Homes Inc. v. 5009796 Ontario Inc. (Kassar Homes), 2024 ONCA 6, as reported, a termination was upheld over a payment 35 minutes late; in Correa v. Valstar Homes (Oakville Sixth Line) Inc., 2025 ONCA 156, nine minutes justified termination. There is a counterweight — More v. 1362279 Ontario Ltd. (Seiko Homes), 2023 ONCA 527, where a seller not ready, willing and able could not rely on time being of the essence. You do not draft for the counterweight.

Then there is what the buyer can recover when something does go wrong. In Shiralian v. Wyldewood Creek Inc., 2026 ONCA 163, as reported, a limitation of liability clause in a builder’s agreement was enforced and the purchasers were limited to the return of their deposit. That is the kind of term that sits quietly in a builder schedule and decides the outcome years later. You are not going to negotiate it out of a large builder’s form, but your client is entitled to know it is there before they sign, and their lawyer is entitled to the document with enough time to read it.

Cooling off: condominium yes, freehold not yet

Buyers conflate these constantly and so do agents. A purchase of a new condominium unit carries a long-standing ten-day rescission right. A purchase of a new freehold home does not — not yet. A ten-day cooling-off period for new freehold homes, covering new detached, semi-detached and freehold townhouses, comes into force on 1 January 2027, and it does not reach agreements entered into before that date.

So today, a buyer signing a new freehold agreement in a sales trailer has no statutory ten days to reconsider. Tell them otherwise and you have described a right they do not have. Diarise the date: from 1 January 2027 the advice changes for freehold, and the distinction between the two regimes will matter more, not less.

Eligibility and taxes before anyone signs

Two things get checked before a builder agreement is signed, not after.

The federal prohibition on the purchase of residential property by non-Canadians has been in force since 1 January 2023 and is extended to 1 January 2027, unless further extended. It reaches buildings of up to three dwelling units inside census metropolitan areas and census agglomerations; vacant land has been exempt since 27 March 2023; properties of four or more units are outside it. Penalties include a fine of up to $10,000 and a court may order a sale. Whether a particular buyer or structure is caught is a legal question, and the answer needs to come from a lawyer before a deposit moves.

Then the transfer taxes. Ontario’s Non-Resident Speculation Tax is 25%, province-wide, since 25 October 2022, and if even one transferee is a foreign entity it applies to 100% of the value rather than a proportionate share. Designated land means one to six single-family residences; parking and storage units have been included since 27 March 2024; seven or more units are exempt. In Toronto the Municipal Non-Resident Speculation Tax adds 10% from 1 January 2025, which is 35% combined on top of land transfer tax and the municipal land transfer tax. On a pre-construction unit with a closing years away, the question of who is on title at closing is not academic.

Your exposure, and how I run a builder file

The registrant exposures here are distinct from resale. Reassuring a buyer about HST rebate eligibility is giving tax advice. Telling a freehold buyer they have ten days to change their mind is a representation about a right they do not have. Letting a client sign an agreement with schedules their lawyer has not seen is a service failure you will not be able to explain. And burying a disclosure in a schedule to the agreement is its own problem — RECO’s guidance is that disclosures must be distinct and separate from the representation agreement and from the agreement facilitating the transaction, which is exactly what a builder schedule is not.

Remuneration deserves a line of its own, because on builder files the co-operating arrangement often lives in the builder’s own paperwork. Where a remuneration clause sits in an agreement of purchase and sale, RECO’s guidance identifies five components: the parties, the purpose, the amount and whether taxes are included, the timing, and who pays and who receives. If the builder’s registration form is doing that work, read it against those five and raise anything missing with your Broker of Record before you register the client.

1. Register the client with the builder properly and on time, on the builder’s terms, and keep the confirmation.
2. Get the Tarion Addendum and confirm it is the current published form, unedited and complete. Read the critical dates first.
3. Get builder registration and this home’s enrolment confirmed — two separate documents.
4. Send the complete agreement, every schedule and the Addendum to the buyer’s lawyer before signing, with a realistic window.
5. Put the HST clause in front of the client specifically and tell them to take it to an accountant. Note that you did.
6. Calendar every payment date and arrange certified funds ahead of each one.
7. Confirm eligibility questions — residency, entity structure, who will be on title — with the lawyer before any deposit moves.
8. Keep the specifications schedule with the file and take it to the pre-delivery inspection.

Pull the current NEW clause wording from your own OREA member copy, and get the Addendum from Tarion. Those two documents, read properly and early, prevent most of what goes wrong on these files. The rest of the series is at the article index.

Questions agents actually ask

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This is professional commentary from a Broker of Record on Ontario new home drafting practice, not legal or tax advice. HST rebate eligibility, buyer eligibility under the federal prohibition, and the effect of any builder term are questions for the client’s lawyer and accountant. This is general professional commentary from a Broker of Record on drafting practice. It is not legal advice, it is not a substitute for your own brokerage’s policies, and it does not create any professional relationship. Clause codes refer to OREA’s Guidelines for Residential and Commercial Clauses, an OREA member resource — the clause wording itself is OREA’s and is not reproduced here. Always work from your brokerage’s approved forms, and send your client to a lawyer for anything turning on interpretation, enforceability or remedy. Legislation, regulator guidance and case law all change; verify anything you are relying on.