The Guarantee provides surety products to the Canadian homebuilder and residential development industries. Developer Surety bonds satisfy provincial legislation by providing warranty and deposit protection to home buyers.
Why choose The Guarantee for Developer Surety?
The Guarantee has been issuing Developer Surety bonds since 1992 and has the depth of knowledge and expertise required for your project. Our team of skilled professionals will work with you to ensure that our Developer Surety products are tailored for your specific residential development project.
Guarantee Developer Surety products:
Tarion Warranty Corporation Bond:
Tarion ensures that builders abide by the Ontario New Home Warranties Plan Act and protects purchasers when developers fail to perform their obligations. The Tarion Bond guarantees each purchaser’s deposit up to $20,000 per condominium and provides the warranty protection required by Tarion.
Developers benefit from a Tarion Bond since it eliminates the need to post a letter of credit or other type of security to Tarion. In addition, the first $20,000 of deposits are eligible to be released to the Developer to help finance the development of the project. The Tarion bond is very competitively priced in comparison to a letter of credit and can provide an inexpensive source of project financing.
Excess Condominium Deposit Insurance (ECDI) & Condominium Deposit Insurance (CDI):
The Condominium Act requires that deposits paid by a purchaser to a condominium developer be held by a trustee. Deposits may be released to the developer so long as an ECDI or CDI policy is issued. These policies guarantee that the deposits will be repaid if the developer fails to deliver the purchaser’s condominium in accordance with the purchase agreement.
ECDI policies are issued for condominium projects covered by the Ontario New Home Warranties Plan Act. The ECDI policy guarantees the return of the purchasers’ deposits in excess of the $20,000 guaranteed by the Tarion Bond.
A CDI policy is issued for condominium projects that are not covered by the Ontario New Home Warranties Plan Act, such as:
- Commercial condominiums
- Office condominiums
- Retail condominiums
- Residential condominium conversions
Developers benefit from an ECDI and/or CDI policy since these products enable them to use purchasers’ deposits as a low-cost and easily-accessible source of financing for the condominium project.
The Guarantee will, on a selective basis, consider requests to support large development companies that wish to provide bonds as an alternative to letters of credit to secure their residential development obligations to municipalities.
Purchaser’s Deposit Bond:
When purchasing a new condominium unit, substantial deposits are usually required by the developer. The Purchaser’s Deposit Bond allows the purchaser to defer the payment of some of these deposits until the purchaser occupies the condominium unit.
Deposit Protection Insurance:
The Real Estate Development Marketing Act requires that deposits paid by a condominium purchaser must be held by a trustee. The trustee may release the deposits to the developer so long as a Deposit Protection Insurance policy is in place.
The Deposit Protection Insurance policy guarantees that the deposits released to the developer will be repaid if the developer fails to deliver the condominium to the purchaser in accordance with the purchase agreement.
Developers benefit from Deposit Protection Insurance because they can use purchasers’ deposits as a low-cost and easily accessible source of financing for the condominium project.
Deposit Protection Insurance:
Under the Alberta Condominium Property Act, condominium developers must ensure that a trustee holds all deposits paid by a purchaser in trust until the purchaser assumes ownership of the condominium unit. The trustee may release the deposits to the developer if the deposits are insured under a government-approved purchaser protection program. The Guarantee's Deposit Protection policy is approved for use by the Alberta government. This product provides financial protection for the purchaser's deposit in the event the developer fails to deliver the condominium to the purchaser in accordance with the purchase agreement. Developers benefit from this product by using purchasers' deposits as a low-cost and easily accessible source of financing for the construction of the condominium project, lowering their overall financing costs and increasing the project profitability.
Let’s get started
To find out more about Developer Surety, contact Pamela Martin, Director - Developer Surety, The Guarantee at 416-223-9580 ext. 11271.