What’s home warranty all about?
By Menno Dueck
Home warranty insurance is construction defect insurance, provided on new single-family and multi-family homes built for sale in B.C., and protects against various construction defects for specific periods of time. Quality standards are always up to each individual contractor/builder.
Residential builders are licensed through the Homeowner Protection Office (HPO), a branch of BC Housing. HPO “serves buyers of new homes and people arranging for new homes to be built, homeowners (particularly owners of homes covered by home warranty insurance), developers, residential builders, building envelope renovators and owner builders.”
Home warranty insurance coverage, better known as 2-5-10 home warranty insurance includes two years coverage on materials and labour, five years coverage on the building envelope (components that separate indoor from outdoor such as exterior walls, foundation, roof, windows and doors), 10 years coverage on building structural defects. Check out www.hpo.bc.ca for further information, descriptions and limitations.
Warranty applies to the home, not the owner and is automatically transferred to the new owner if sold within the warranty period. If purchasing a resale, review the policy, confirm coverage expiry dates and ask the owner for a claims history report. You might consider making this a condition of sale. The New Homes Registry, online at HPO, will tell you whether the house has a policy, who the carrier is, or if the home was ‘owner built.’
Owner builders are authorized by HPO to build a new home for their personal use, are not required to be licensed by HPO nor arrange for third party home warranty insurance on that home. An owner builder must “build or directly manage the construction of their new home themselves. If an owner builder engages a builder, construction manager, project manager, or any third party to perform these functions, both the owner builder and the hired construction manager/builder are committing offences” and could face fines and/or prosecution. Owner builders do not usually have home warranty insurance to rely on in case of construction defects, nor would subsequent purchasers; the owner builder is ultimately responsible for a period of 10 years.
With the exception of a few special circumstances, an owner-built home may not be offered for sale, sold, or rented any earlier than one year after the new home has been built; the intention is for the home to be for personal use. HPO has a well detailed information bulletin for owner builders on their website.
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– Menno Dueck, Ask Menno Consulting – Dueck Enterprises Inc. and DueckEnterprises.com