Planning to buy a new home in beautiful British Columbia? Let’s simplify the Homeowner Protection Act and its regulations by focusing on essential details about mandatory home warranty insurance for new homes.
Understanding Home Warranty Insurance
In British Columbia, all new homes constructed by licensed residential builders must have mandatory third-party home warranty insurance. This insurance protects homeowners from construction defects. Therefore, it gives peace of mind when purchasing a new property.
Strong Coverage for Peace of Mind
Notably, this home warranty insurance offers one of Canada’s most robust construction defect insurance coverage. Consequently, it ensures protection against unexpected issues with your new home.
Minimum Coverage Requirements
The insurance comes with specific minimum coverage, which includes:
- 2 years for labor and materials (with some limits)
- 5 years for the building envelope, including protection from water penetration
- 10 years for the home’s structure
These coverage periods shield you from various defects. They range from minor problems to significant structural issues.
Who Does This Apply To?
If your new home was built under permits applied for on or after July 1, 1999, these rules apply. However, there are exemptions. Therefore, it’s crucial to understand your situation.
Exemptions and Owner Builders
Owner builders often have exemptions from licensing and home warranty insurance requirements. They are, however, subject to the Act’s 10-year Statutory Protection provisions. These provisions hold them accountable for defects for ten years after the first occupancy.
Other Exemptions
Certain classes of new homes, such as manufactured homes, hotels, motels, dormitories, care facilities, and floating homes, are exempt from home warranty insurance requirements. Nevertheless, if any of these properties are strata-titled, they may need home warranty insurance.
Homes on First Nations Lands
Homes on First Nations reserve lands are exempt from the Homeowner Protection Act’s requirements. Nonetheless, homes on Treaty First Nations lands are not exempt and require licensing and home warranty insurance.
Key Dates to Remember
The commencement dates for home warranty insurance vary based on the home type. For fee simple properties (primarily detached homes), custom homes must have insurance starting from the date of occupancy or the first occupancy permit, whichever comes first. Speculative homes must have insurance starting from the date of first occupancy or legal title transfer, whichever comes first.
For strata properties, the strata unit’s insurance starts on the date of the first occupancy or legal title transfer to the first owner, whichever comes first. The insurance for common property begins on the date of the first-unit occupancy or legal title transfer, whichever comes first.
Coverage Limits and Exclusions
Be aware of coverage limits and exclusions. Home warranty insurance companies might exclude landscaping or non-residential detached structures. Additionally, defect-related exclusions could include wear and tear, damage by insects or rodents, or acts of nature.
Understanding these details about home warranty insurance in British Columbia simplifies your decisions when buying a new home. Always consult the Homeowner Protection Act and its regulations for precise guidance, and talk to your builder for specific coverage details.
Please contact Jared Gibbons, your local realtor, should you have any questions.