A guarantee and indemnity agreement is a contract between two or more parties in which one party agrees to guarantee the performance of another party’s obligations or to indemnify the other party against losses. In the context of Tarion, a guarantee and indemnity agreement can be entered into between a builder and Tarion to ensure that a builder meets its warranty obligations to home buyers.
Tarion is a non-profit corporation that regulates new home builders and provides warranty protection to new home buyers in Ontario. Under the Ontario New Home Warranties Plan Act, 1976, builders in Ontario are required to provide certain warranties to purchasers of new homes, including a one-year warranty for defects in workmanship and materials, a two-year warranty for defects related to the plumbing, electrical, and heating systems, and a seven-year warranty for major structural defects.
If a builder fails to meet its warranty obligations under the Act, Tarion may step in to provide warranty protection to the home buyer. However, to ensure that builders meet their obligations, Tarion requires builders to enter into a guarantee and indemnity agreement.
Under the agreement, the builder agrees to guarantee the performance of its warranty obligations and to indemnify Tarion against any losses that Tarion may incur as a result of the builder’s failure to meet its obligations. This includes any costs or expenses that Tarion may incur in relation to repairing or replacing defective work or materials, as well as any legal costs or expenses that Tarion may incur in order to enforce the builder’s warranty obligations.
The guarantee and indemnity agreement is a crucial tool for Tarion in ensuring that builders meet their warranty obligations and that home buyers are protected in the event of defects or other issues with their new homes. It is also an important protection for builders, as it helps to mitigate their risks by ensuring that they have the resources and incentives to meet their obligations under the Act.
In conclusion, the guarantee and indemnity agreement is a powerful tool in the Tarion system for ensuring that builders meet their warranty obligations and that home buyers are protected. If you are a new home builder in Ontario, it is important to understand the role of the guarantee and indemnity agreement and to ensure that you are meeting your warranty obligations under the Act. As a professional, I recommend that you consult with legal and regulatory experts to ensure that you comply with all applicable laws and regulations in Ontario.