A buyer signs an agreement in March 2026 to buy a new freehold home from a builder for $850,000 and pays $120,000 in deposits. The builder then goes bankrupt and the sale never closes. Under Regulation 892 made under the Ontario New Home Warranties Plan Act, what is the most Tarion can pay on her deposit claim?
Correct Answer
C) $85,000
For a freehold purchase agreement signed on or after January 1, 2018, Reg. 892 s. 6(1)(c) caps deposit compensation at the greater of $60,000 and the lesser of 10% of the sale price and $100,000. Ten percent of $850,000 is $85,000, which is above $60,000 and below $100,000, so the cap is $85,000. The other $35,000 of her deposits is not protected by Tarion.
Why This Is the Correct Answer
Ten percent of $850,000 is $85,000; that is less than $100,000 and more than $60,000, so Reg. 892 s. 6(1)(c) makes $85,000 the maximum payable.
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