A landowner signs a construction contract with a builder to build a house on her own rural lot. She pays the builder $150,000, but the builder abandons the job after supplying work and materials worth $95,000. What is the most Tarion will pay her for this financial loss?
Correct Answer
B) $40,000
Under s. 14(2) of the Ontario New Home Warranties Plan Act, an owner whose builder fails to substantially perform a construction contract may claim the amount paid in excess of the value of the work and materials supplied, here $150,000 minus $95,000, or $55,000. Reg. 892 s. 6(1)(b) caps a construction contract claim at $40,000, so Tarion pays at most $40,000.
Why This Is the Correct Answer
Her loss is $55,000, but the regulation limits a construction contract claim to $40,000, so $40,000 is the most she can recover.
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