BC NEW HOME WARRANTY
NEW HOME WARRANTY BC
2 5 10 WARRANTY
Author: Meryl Hamdillah, REALTOR with Sutton WestCoast Group.
If you are looking for a realtor to help you buy or sell a property in Coquitlam or Vancouver, feel free to Chat with me now! 604-307-9506
When buying a pre-sale home, a brand new home, or a home less than 10 years old, you should understand what home warranty is included and what warranty coverage has been transferred to you.
This blog discusses what is covered by BC’s new home warranty or 2 5 10 warranty and what the minimum coverage is. It is important to note that any specific third party warranty policy may cover more than the mandatory minimum required by BC.
The time periods of warranty coverage and their limits are discussed. Read on to understand everything you need to learn about the warranty as well as how to find and claim for defects.
WHO IS THIS BLOG FOR?
This article is focused on the BC new home warranty coverage and how to claim for home defects. It is meant primarily for but not limited to:
- someone who recently purchased a presale home from a licensed builder/developer and the home is under construction;
- someone who recently purchased a newly built home from a licensed builder or an owner builder who purchased third-party home owner insurance;
- someone who already purchased a home that was built 10 years ago or less and want to know what and whether they can claim a defect under 2-5-10 warranty;
- to a lesser degree, for those who purchased a home that is exempt from warranty requirement. This blog will help you understand the exemptions but coverage and legal rights for owners of exempt homes may be covered by HPA under statutory protection that is outside the scope of this article.
WHAT IS THE BC NEW HOME WARRANTY?
In British Columbia, the mandatory minimum “2-5-10” warranty was implemented on July 1, 1999. Since then, all new homes constructed by residential builders who are licensed with BC Housing are covered by a policy of home warranty insurance. This mandatory warranty was implemented in response to the 1990s leaky condo crisis in Metro Vancouver when existing insurance and builder liability failed to protect most homeowners. As a result, BC mandated that all new constructed homes in BC would have the minimum insurance coverage of this particular warranty unless the home had an owner builder or another exemption applied.
up to 2 years Coverage (limits apply)
Materials and Labour:
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:
(i) defects in the electrical, plumbing and HVAC delivery and distribution systems,
(ii) defects in the exterior cladding, caulking, windows, and doors that may lead to detachment or material damage,
(iii) defects which render the home unfit to live in, and
(iv) violations of the building code;
5 years Coverage
Defects in the building envelope (or the exterior of the building). Includes water penetration.
10 years Coverage
What does the 2 5 10 warranty cover?
As the warranty name suggests, there are different types of defects covered under each period of the warranty. In general, the 2-5-10 warranty provides coverage as follows:
Within 2 years:
12 month coverage on detached homes and non-common property of strata homes(including fee simple/freehold strata) for defects in materials or labor and violations of the building code;
15 month coverage for common property on strata units;
24 month 2 year coverage on:
(i) defects in the electrical, plumbing and HVAC delivery and distribution systems
(ii) defects in the exterior cladding, caulking, windows, and doors that may lead to detachment or material damage
(iii) defects which render the home unfit to live in
(iv) violations of the building code;
Five Years: Coverage for defects in the building envelope (or the exterior of the building).
Ten Years: Coverage for any structural defects.
IMPORTANT!: Your policy and coverage will vary. Home insurance policies may meet or exceed the minimum required by the 2 5 10 warranty. Please review your specific policy for details.
When does the 2 5 10 warranty coverage start?
Single Detached Homes (non-strata)
› Custom homes: date of first occupancy,date of first occupancy permit, or date the home was completed and ready for occupancy, whichever comes first.**
› Speculative homes (pre-built for general market built on land owned by developer or builder): date of first occupancy or date of transfer of legal title to first owner, whichever comes first.**
**Note the difference is that for custom homes, the coverage can begin once the building is completed for occupancy and that could occur before you take occupancy.
› Strata unit: earliest of date of first occupancy or date of transfer of legal title to first owner.
› Common property: earliest of date of first-unit occupancy in strata building or date of transfer of legal title to first owner in building, whichever comes first.
How do I find out who my new warranty provider is?
You need to know who your warranty provider is. To find out which company covers your home:
• if you are about to purchase the home, ask your builder or real estate salesperson
• if you already bought the home and don’t know, see if there is a sticker on your main electrical switch box
• check your policy documents or your home maintenance manual if you
• check BC Housing’s online New Homes Registry for homes built after
November 19, 2007
• contact the BC Housing’s Licensing and Consumer Services branch for homes
built between July 1, 1999 and November 19, 2007
What homes are exempt from the warranty requirement?
Some residential buildings may be exempt from the requirement for home warranty insurance, including:
• homes built by owner builders (a separate section of this guide describes
provisions for owner-built homes),
• manufactured homes (mobile homes and factory-built units) that have not been
significantly modified and/or added onto on site,
• non-stratified hotels, floating homes, motels, dormitories and care facilities,
• multi-unit rental buildings where the sale of any individual unit is restricted by
a 10-year covenant registered against the title, and
• social housing
How do I know whether my defect is covered?
It is important to know that the specifications of BC’s home warranty is a minimum guideline and that your policy and coverage will vary for each home. Home insurance policies may meet or exceed the minimum required by the 2 5 10 warranty. Please review with your policy holder on details.
For those of you looking for some detailed coverage examples as defined by BC Housing, check out the Residential Construction Performance Guide | For New Homes Covered by Home Warranty Insurance in British Columbia.
A good piece of advice for any homeowner with attached or identical row homes: Take pictures of the visible defects that were not present at the time of your purchase and check with your neighbor. It’s possible that they may have already claimed warranty for a similar defect.
A second piece of advice for those who just purchased or about to purchase a new home is to take good pictures and notes at the Deficiency Walkthrough. The reason the deficiency walkthrough report is important is that defects are often compared against this initial report for condition and quality of the work.
What is not covered by my new home insurance?
As you can tell insurance coverage and claims can be difficult to understand. There are a number of ways to make this more manageable as a homeowner. As noted, some examples of what is covered is provided as a guideline in the Residential Construction Performance Guide but ultimately you need to refer to your insurance policy provider – remember it doesn’t hurt to ask your insurer if you are unsure what is covered. Keep in mind that some homes may be exempt from warranty requirement. Exceptions to coverage also exist but these will be discussed in a following section.
What can be excluded from warranty coverage?
According to Homeowner Protection Act (“HPA”) and HPA regulation, the following can be excluded from the policies:
General Exclusions 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
To determine what is covered by your new home warranty and what items are excluded, we strongly recommend that you review your policy for specific details and consult with a professional with a construction background.
Does my new home warranty expire or terminate when I sell my home?
The warranty is attached to your home, and not to the owner of the home, and remains in effect upon the re-sale of the home until the coverage expires. For instance, let’s say you own and lived in a townhome for 7 years and you decide that it’s time to sell, the new homeowner would enjoy the benefit of claiming any structural defects since there would still be 3 years remaining in the warranty.
How can I find and report defects on time?
Most homeowners are not construction experts. While many people can identify visible defects, there is a possibility that we can miss hidden ones. For those that want to mitigate this risk, we suggest that you hire an inspector at important times during your warranty. For those “Do it yourself” homeowners, the Residential Construction Performance Guide provides some examples that can help. The key times to do inspections should be put on a calendar at the key warranty time expirations at: 12 months, 2 years, 5 years, 10 years. The most important inspections at 5 and 10 years should be done by an expert as these require technical construction expertise.
Additionally, you can plan ahead by budgeting some money to hire an inspector at the key periods where you want to hire an inspector.
When should you make a warranty claim?
You should make a warranty claim within a reasonable time after the defect is discovered and before the expiry of the applicable warranty coverage. So, for example, if you discover a defects in the windows and doors that may lead to detachment or material damage close the 5 year limit, it is important that you submit your claim before the 5 year deadline so you don’t miss out any claiming the applicable warranty. Any defects in the windows or doors after the 5 year limit may put you in a risk of losing the benefit of the 5 year warranty.
What information should be included in the warranty claim?
The written notice must provide particulars of any specific defects covered by the warranty.
The claim should include the following:
A cover letter that sets out the strata plan number if applicable, the civic address, warranty certificate number along with a description of any known or suspected defects and damage that would be covered under the warranty;
A copy of the warranty certificate;
Any and all prior correspondence with the warranty provider or builder related to the defects; and
Any other documentation that can provide details of the defects or damage e.g. inspection report
Who should the warranty claim be sent to?
The claim must be delivered to both the builder and warranty provider identified on the warranty certificate. You can find the builder’s mailing address at BC Housing’s online registry or you may also obtain the address of the builder and warranty provider by conducting a corporate registry search through an agent such as Dye & Durham. For those with more than one possible address, it is recommended that you err on the side of caution and deliver the claim to all known addresses.
How should the warranty claim be delivered?
Because the validity of the claim is time sensitive, it is important that you provide proof of timely receipt by hiring a third party like Canada Post or Corporate Couriers to confirm the date and time of delivery. This ensures that you have claimed the applicable warranty within the proper time frame.
What happens after the claim is submitted?
The warranty provider might ask the builder to investigate, or it may send a claims representative to evaluate the claim. Cooperate with the warranty provider and/or builder by providing information and reasonable access to inspect or repair the defects.
Other Blogs you may be interested in
If you are a new home purchaser, keep in mind that the initial Deficiency Walkthrough is an important snapshot of the condition of your new home that is referred to during insurance claims.