With a new build home, it is entirely possible that construction flaws may reveal themselves immediately upon purchase, or a few months or even a few years after purchasing the newly built home.
As of February 1, 2014, every new build home in Alberta is protected under warranty. Alberta’s New Home Buyer Protection Act (“NHBPA”) advocates for very high-quality standards in order to make sure that every new home stands the test of time. This applies to all new homes constructed by builders ranging from condominiums, recreational properties, manufactured homes, multi-family homes, duplexes to single-family homes.
A new home warranty is an insurance product that protects your home from material, labour and structural defects that may arise after construction. The warranty stays with the home, whether you are the original owner or subsequent buyer and typically lasts for 10 years.
Before you sign a contract with a builder, it is essential to verify that your chosen home builder is registered with a warranty provider, and for you to understand what is covered, for how long it is covered and what potential defects may not be covered.
WHAT IS THE ALBERTA NEW HOME WARRANTY PROGRAM?
While there are a number of warranty providers in Alberta, the one that is the most popular amongst builders is the Alberta New Home Warranty Program. Founded in 1974, the Program is currently Alberta’s largest home warranty provider with over 700 Builder Members.
According to the Alberta’s New Home Buyer Protection Act (NHBPA) legislation, at a minimum the warranty on each new home will provide “1-2-5-10” coverage.
1 Year – Labour and Materials
Mandatory warranty includes one year’s coverage for defects in materials and labour. This addresses issues with the way your home was built or the materials it was built with. It includes such items as flooring, trim and fixtures.
2 Year – Distribution Systems
New home warranty must cover defects in labour and materials related to heating, electrical and plumbing systems for two years from the warranty commencement date.
5 Year – Building Envelope
Homebuilders in Alberta must provide five years’ coverage for defects in the building envelope and must offer an optional two-year extension on building envelope coverage for a total of seven years’ coverage.
10 Year – Structural Integrity
Mandatory warranty covers the key structural components (for example, the frame and foundation) of single-family homes and multi-family dwellings for 10 years from the warranty commencement date.
Should the home become uninhabitable as a result of a defect or while warranty work is underway, programs such as the Alberta New Home Warranty Program will pay a daily rate up to a maximum amount for reasonable living expenses incurred by the insured.
It is important to understand that as with any coverage, a new home warranty will come with coverage limits. These limits differ based on the type of dwelling: Single-family, multi-family registered under a condominium plan, warrantable common property, or a non-condominium multi-family unit (Ex. A duplex, or row townhouse.)
PRE-POSSESSION AND DEPOSIT INSURANCE
The Alberta New Home Warranty Program offers pre-possession insurance for single-family homes, which is a combination of deposit insurance and home completion insurance. The Government of Alberta does not mandate the inclusion of pre-possession and deposit insurance coverage in every new home warranty, and it is an entirely optional product that the Alberta New Home Warranty Program chooses to offer to its members. Additions like this are important to understand and look for when it comes to reviewing the inclusiveness of the offered warranty through your chosen builder.
The Alberta New Home Warranty Program also offers the Alberta Renovation Warranty Program via their members. The Program imposes strict standards for membership thus giving the homeowners complete confidence in their chosen renovators.
The Alberta Renovation Warranty Program combines deposit protection insurance up to $100,000.00 with Warranty Insurance that covers materials and labor up to $100,000.00 and provides comprehensive protection from the moment a homeowner engages with the renovation company until two years after the work is substantially completed.
Questions about purchasing a new construction home? Questions about your New Home Warranty or the Builder’s contract? Contact our real estate lawyers Here.