Bestland Consulting assists clients in obtaining HCRA builder and/or developer license and Tarion warranty enrollment in Ontario. We have summarized the frequently asked questions (FAQs) from new builders and developers. However, we recommend using our Consulting Services for in-depth questions.

HCRA Builder/Developer License

Q: When I build a new home to sell, should I have a builder and developer license and Tarion warranty?
A: Yes. If you build new home(s) for sale, you should have a builder and developer license and Tarion warranty enrollment. However, you usually do not need a builder license and Tarion warranty when your new homes are not for sale, for example, when you build it for your own family. The regulation aims to protect new home buyers.

Q: May I sell new homes without a builder licence and Tarion warranty enrollment?
A: No. You must obtain a builder licence and Tarion warranty enrollment before home sale.

Q: Which government department is in charge of builder and developer licensing?
A: The Home Construction Regulatory Authority (HCRA) is the provincial department in charge of builder/developer license approval and supervision in Ontario.

Q: The builder and developer license is award to an individual or entity (such as corporation)?
A: The license may be awarded to both individual or entity (such as corporation). As development and construction’s nature, using a corporation as builder/developer is the popular choice in this industry.

Q: What are the types of HCRA license?
A: When you apply for a license from HCRA, there are three choices: 1) Builder license; 2) Vendor license (developer license); 3) Builder+Vendor license.

Q: Is my license valid for all building categories?
A: No. The HCRA license has two categories: 1) Non-condo; 2) Condo (It has five subcategories: Type A, B, C, D, and condo conversion). You should apply for the appropriate category and subcategory for your builder or developer license. We recommend clients apply for as many as they can.

Q: Does the developer need a license?
A: Yes. The developer license is called “vendor license” in the HCRA and Tarion system. However, the word “developer” is more commonly used than “vendor” in business practice.

Q: What are the requirements to obtain a builder and developer/vendor license?
A: The HCRA will look at these key points: 1) Seven competencies/exams for builders, five competencies/exams for developers. In a few circumstances, the exams may be waived. 2) Credit of the applicants (corporation or other entity) and its directors/officers. 3) Criminal record and judicial matters. 4) Applicant’s financial situation.

Q: What are the competencies/exams for builders and developers?
A: The developers shall pass the five exams: 1) Business Planning and Management; 2) Financial Planning and Management; 3) Project Management and Supervision; 4) Legal Issues in Housing; 5) Customer Service and Tarion Requirements. The builders shall pass two more exams: 6) Building Codes. 7) Construction Technology.

Q: Is it difficult to pass the exams? How long does it take?
A: According to our experience, the exam level is similar to undergraduate level course. It takes about 4-10 weeks per course study and exam, but it varies from person to person.

Q: Do I need to pass all seven exams for builder and five exams for developer?
A: No. Your team (director, officer) passes the exams together. You can pass 2 exams, and other directors/officers pass other exams.

Q: Does Bestland provide training for the exams?
A: No. We are a consulting firm that helps clients apply for the builder/developer license and Tarion warranty. We do not provide training, but we will refer our clients to appropriate training centers.

Q: How long can HCRA approve the license application?
A: Based on our experience in past years, the approval process may take 8-12 weeks.

Q: How often do I need to renew my HCRA builder/developer license?
A: Annual renewal.

Tarion Home Warranty

Q: Can I apply for an HCRA builder license and Tarion warranty enrollment in parallel?
A: Yes, you can do that since 2023. However, you must submit the HCRA builder/developer license application first and then apply for the Tarion warranty enrollment.

Q: What types of homes are covered under the Tarion warranty?
A: The Tarion warranty covers new residential homes, including freehold homes, condominiums, and residential condominium conversion projects in Ontario.

Q: What are the key points that Tarion looks at?
A: Before the Tarion warranty approval, you must obtain the HCRA builder/developer license. Then, Tarion focuses on these issues: 1) Financial capacity; 2) Developer and builder’s historical record and credit; 3) Credit and experience of the management team.

Q: How much is the Tarion warranty security per unit?
A: Usually, it is $20,000-$40,000 per unit for new developers and builders. Tarion has a scoring system for risk assessment. For developers with a long history and good record, the security may be as low as zero.

Q: We are the developer, and we will hire a licensed builder to construct our projects, who shall pay the Tarion security?
A: It is the developer/vendor’s responsibility to pay for the Tarion security.

Q: How do I pay for the Tarion security?
A: You may pay for the Tarion security from your pocket, letter of credit from banks, or surety bonding.

Q: Can you provide more information about the Tarion warranty?
A: The Tarion warranty is a complicated system. If you need more assistance, please hire our consulting service.