Swampland:
To my knowledge, if you sue the municipality and the builder only, Tarion is not included in the litigation process. The builder and the municipality may enter Tarion related evidence but Tarion does not have the authority to administer the Ontario Building Code. We are suing the builder and the municipality who in turn have a cross claim against each other because of our action. It appears one is blaming the other for the oversight of the building code adherence.

Is there any legal option to sue Tarion regarding a warrantee issue? You like have to exhaust your options first, at Tarion's License Appeal Tribunal. Has anyone out there ever sued Tarion directly?

If you accept the time/cost/learning burden, you likely have a major issue that could force a subsequent owner of your home to sue you if you “patch and run”, without disclosing what you know. For example, leaving behind secretly deteriorating concrete might endanger lives and eventually make the home visibly un-sellable. Thus, you effectively assume a huge liability that perhaps the builder or Municipality aught to have owned, a liability that could perhaps wipe you out financially, one day when you least expect it.

Tarion may not appear eager to classify construction problems as major structural. Maybe they are not adequately underwritten, or have enough cash reserves, to accommodate too many major structural claims. Their fund resource requirements impact their fees, which may thus depend more upon claim classifications than upon actual claim payouts (which last year were zero percent for major structural I believe). I think the home insurance in BC went bankrupt due to inadequate resources. Higher fees might not be popular.

If you have already exhausted your options at the LAT, you can request a judicial review at the Divisional Court of Appeal. You might find plenty of case law to show similar LAT decisions being thrown back at Tarion. That could be interesting to those who argue that Tarion/LAT tends to protect builders at homeowners' expense.

Municipalities are perhaps very vulnerable to litigation if they approve code non-compliant homes. An experienced building code expert could perhaps find twenty to fifty separate building code violations in your mass-produced new home, the code book is not thin.

Actually, the entire building code approval process is itself vulnerable to builders and their suppliers. Such parties can hire bad Professional Engineers, aka "stamps for hire". Your building plans have to be P.Eng. stamped.

The P.Eng. Association (APEO) can independently prosecute a bad P.Eng. The APEO would first need to receive your complaint by email. A prosecution by the APEO could assist your claim against the P.Eng's obligatory professional insurance, which could be a few $million, compared to say the small claims court which is only a $50 application fee for up to $10k. You could pursue both options at once.

Some P.Eng’s do not even do a site survey to show exact compass orientation on their plans. Some fudge calculations, or sign documents that they have not properly read. Any little error can make a P.Eng. liable, but errors can also be staggeringly significant. P.Eng licenses (stamps) can be taken from them by the APEO if they act unprofessionally. Even a Municipality’s Chief Building Officer could risk his license to practice if he does not obey APEO rules.

Anyway, generic plans for mass-produced homes are not adequate, your plans and calculations have to be for your EXACT home, in its as-built condition. Each and every discrepancy could offer potential leverage, even if they do not address your crumbling basement issue, or whatever it is. They could also attest to claims like the entire home not being constructed in a “workmanlike manner”, and “free from defects in material”.

Municipalities may not have the budget to do their jobs properly. One might expect them to to seek peaceful ignorance, perhaps hiding behind Tarion, the LAT or builders. The government and the building trade may be full of old boys who are perhaps well known for avoiding responsibility.

So, the Municipality may see little benefit admitting to all the violations it may have mistakenly approved, especially if a major fix is required in many homes. Fortunetely, the CBO also has the option to recover costs from any P.Eng. the Municipality has relied upon.

The Municipality is obliged to make available all the plans and correspondence they have on record, about you or your home. They are not allowed to destroy any of that stuff. You can even get all their emails, some of which may show their staff complaining about your bad attitude or admitting to having made mistakes.

The Municipality should provide a Freedom of Information Act form you can fill in, and do so carefully to make sure your request is properly encompassing. If the Municipality does not have such a form, or if they do not have their own Privacy Officer, or if you suspect you are not getting all they have on file, you can refer to the Privacy Commissioner, who typically progresses things quite rapidly.

The Ombudsman of Canada may also be worth a call. You never know, he may already have a few related investigations on the go. Perhaps you are not the only one afflicted. If the buck stops anywhere, it might have to be with the Ombudsman.