Consumers can rest assured that New homes built in B.C by licensed residential builders must be covered by mandatory, third-party home warranty insurance as set out in the Homeowner Protection Act.
At a minimum, home warranty insurance coverage includes:
- 2 years on labour and materials (some limits apply)
- 5 years on the building envelope, including water penetration
- 10 years on the structure of the home
The two-year labour and materials coverage covers any defect in labour and materials for:
- 12 months on detached homes and on non-common property in strata units (including fee simple homes)
- 15 months on the common property of strata buildings
- 24 months on all new buildings for defects when related to delivery and distribution systems; defects related to the exterior cladding, caulking, windows or doors that may lead to detachment or material damage to the new home; coverage for violations of the Building Code that constitute a health or safety risk or is likely to result in damage to the new home; and defects which render the home unfit to live in.
Minimum coverage for third-party home warranty insurance is set by legislation. As a minimum, homes built by Licensed Residential Builders must have 2-5-10 Year Home Warranty Insurance . Some new homes have warranty insurance coverage that exceeds the minimum requirement. You should carefully review your home warranty insurance policy documents which will provide specific details on the home warranty insurance coverage on your home.
The warranty is attached to the home, not to the owner of the home, and remains in effect upon the re-sale of the home until the coverage expires.
Strata-titled homes have two policies of home warranty insurance: one on the home and the other on the common property. Sometimes when the coverage of a new strata-titled home starts, the coverage on the related common property has already started — or expired. Coverage on the common property of strata-titled buildings starts when the first unit in the building is occupied or sold.
The most common exemption from the licensing and home warranty insurance requirements is a new home built under an Owner Builder Authorization.
Unless home warranty insurance is provided, owner-built homes are subject to the 10-year Statutory Protection provisions of the Act. These provisions hold the owner builder personally responsible to subsequent purchasers for any defects in labour, materials or design for 10 years after first occupancy.
If you buy such a home and find defects, you must contact the owner builder directly. Any action to remedy defects by a purchaser must be started within the 10-year period.
The Act and Regulations say what the home warranty insurance companies can exclude from their policies.
General exclusions can include:
- Non-residential detached structures (parking structures, recreational and amenity facilities in multi-unit buildings are covered)
- Commercial use areas
- Roads, curbs and lanes (driveways are covered)
- Site grading and surface drainage
- The operation of municipal services
- Septic tanks and fields
- Water quality and quantity
Defect related exclusions can include:
- Normal wear and tear
- Normal shrinkage of materials from construction
- Use of new home for non-residential purposes
- Labour, materials and design supplied by the owner
- Damage caused by anyone other than the residential builder
- Damage caused by insects or rodents
- Failure of an owner to prevent or minimize damage
- Acts of nature
Coverage on claims works as follows:
Fee simple (primarily detached dwelling units):
- The lesser of the first owner’s purchase price or $200,000
- Strata unit: lesser of the first owner’s purchase price or $100,000
- Common property: the lesser $100,000 times the number of dwelling units in the building or $2.5 million per building
Building a new home is a significant investment, one that requires
research. Research your builder. How long have they been in
Are they a licensed builder? If you are looking for a particular builder, you can search by licence number, company name, or primary contact name. To see who is licensed in your area, enter your location and search for residential builders, building envelope renovators or both.
FIND OUT IF YOUR BUILDER IS LICENSED IN BC
Ask for testimonials from past clients. Ask if you can contact them and or drive bye the home that was built.
your RE/MAX Agent. They will be able to get you information about your
prospective builder including their history and reputation.
Your agent will also draft your contract to protect your interests. Your agent will insert into the contract the specifications of construction
(what the home is made of details), layout designs, assist you in establishing interior finishing allowances and whether they are sufficient,
set up a down payment schedule that works for you the buyer.
Building a new home is a big project. Make certain that you do your homework and have a professional on your team!
Contact us if we can help!
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