2-5-10 Year Home Warranty

Here are the requirements for a home warranty for new homes.

On July 1st, 1999 the Homeowner Protection Act regulations for residential builder licensing and mandatory, third-party home warranty insurance were implemented. The reason behind this was to increase consumer protection for new home buyers. Due to this, any homes that are built with a building permit that is applied after July 1, 1999, must be built by residential builders licensed with BC Housing and covered by a policy of home warranty insurance. Even if you are building a home that is located in an area where building permits are not required, you will still need licensing and a home warranty for any new home construction after July 1, 1999.

There are a few requirements for home warranty insurance, this includes:

- A minimum of 2 years on labor and materials (some limits apply)

- 5 years on the building envelope, including water penetration.

- 10 years on structure.

The 2-year labor and materials coverage is broken down here:

- 12 months on detached homes and non-common property in strata units (includes fee simple homes)

- 15 months on common property of strata buildings

Defects in materials and labor related to the delivery and distribution systems, (electrical, plumbing, heating ventilation, air conditioning, etc.)

- 24 months for all buildings. 

Now you may be wondering when is my technical first day?

- Custom homes: this will be the first date of occupancy, or the first occupancy permit, whichever one transpires first will be chosen.

- Spec. homes: this will also be the first date of occupancy, or the date of transfer of legal title to the first owner, whichever one transpires first will be chosen.

- Strata unit: Earliest of date of the first occupancy, or the date of transfer of legal title to first owner.

- Common property: earliest of date of the first-unit occupancy in a strata building, or date of transfer of legal title to the first owner in the building.

Along with the requirements, there are also exclusions, the Homeowner Protection Act regulations specify what the home warranty insurance companies can exclude from their policies.

General exclusions can include landscaping; non-residential detached structures. (However, parking structures, recreational and amenity facilities in multi-unit buildings are covered) Commercial use areas; roads, curbs, and lanes (however driveways are covered). Site grading and surface drainage; the operation of municipal services; septic tanks and fields; and water quality and quantity.

Defect related exclusions can include normal wear and tear; normal shrinkage of materials from construction; use of the new home for non-residential purposes; materials, labor, 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 and acts of nature.

Homeowners can search the online Residential Construction Performance Guide to help determine whether a possible defect in design, labor or materials in their new home may be covered by home warranty insurance. Visit the BC Housing website in order to view their guide.

Coverage on claims:

Fee simple (primarily detached dwelling units):

- The 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. 

Sources: 

- https://www.bchousing.org/licensing-consumer-services/new-homes/home-warranty-insurance-new-homes

This information was also taken from a Regulatory Bulletin PDF file fromhttps://www.bchousing.org/home