Just like any warranty, a new home warranty policy should be closely scrutinized before finalizing a property purchase. Always bear in mind that warranty companies are not in business to payout large sums of money if they have any way of avoiding doing so. Also, do as much research on the builder (not just the developer as this is often a separate company) as possible and research previous projects they have built.
What is it and how does it protect me?
A new home warranty policy provides for deficiencies in construction. If problems are discovered and not addressed by the builder then a claim can be made with the warranty company to remedy the deficiencies.
What is covered and what is the minimum coverage term required by law in BC?
Coverage varies depending on whether or not the property is strata or a detached home. All builders in BC must be licensed by the Homeowner Protection Office (HPO) and must provide at least a 2-5-10 new home warranty. A typical 2-5-10 example:
2 Years – Materials and Labour Defects
5 Years – Building Envelope Defects (including water penetration)
10 Years – Structural Defects
Does the fact that a builder is registered and therefore able to offer me a new home warranty ensure a high build quality?
No. Do your own due diligence and check out the builder’s history. How long have they been building? Any problem projects they’ve been involved in? It will often be much easier to choose a high quality builder at the outset then to try to collect on a home warranty policy after the property is complete.
Are there any limits on claim amounts?
Yes, the limits are 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 of $100,000 times the number of dwelling units in the building or $2.5 million per building.
Is it transferable?
Yes. The warranty is tied to the property and will transfer to subsequent owners based on the initial policy commencement date.
I welcome any questions you may have about selling or buying.
Feel free to comment or contact me directly.
New Home Warranty Brochure from the HPO