Tarion has introduced significant changes to the major structural defect claims process. These changes will affect all condominium projects where the first arm’s length agreement of purchase and sale was signed after July 1, 2012. All of the changes are currently reflected in Regulation 992 to the Ontario New Home Warranties Plan Act, and summarized in Builder Bulletin 24 (revised).
After consulting with the condominium industry for the past several years, Tarion has expanded the definition of “major structural defect ” (“MSD”) to provide further direction to owners, builders and condominium corporations as to which deficiencies do in fact constitute a MSD.
The definition of MSD in the Regulations now refers to three separate “tests.”
The “failure” test looks at whether the defects in work or materials would result in “failure of a structural load-bearing element of a building.” Tarion describes this as a “fairly stringent test that contemplates actual structural failure.”
The “function” test looks at a structural load-bearing element and its function. Accordingly, any defect in work or materials that materially and adversely affects the ability of each structural load-bearing element of the building to carry, bear and resist applicable structural loads for the usual and ordinary service life of such element will be a MSD.
The “use” test was referenced in the previous definition of MSD, although the current language has been revised. In order to constitute a MSD, the “use test” requires that a “significant portion of the home (or common elements) is materially or adversely affected.” The use test is an objective standard which looks at the usual and ordinary purposes of a residential dwelling. Accordingly, in the condominium context, if a load bearing related deficiency significantly affects the use of a common element lobby, then presumably Tarion would constitute this as a MSD.
As was the case under the previous procedure, an MSD claim has to be advanced by a condominium corporation within 7 years of registration. The major difference is that if the deficiency does constitute a MSD under the new definition, the builder now has an opportunity to either take full responsibility for the MSD, or reimburse Tarion an amount referred to as a “co-share payment.”