2-5-10 Warranty BC Explained
When buying presale condos and new construction homes in British Columbia, the BC New Home Warranty from BC Housing stands as a beacon of trust and assurance for homeowners. This program is emblematic of BC’s dedication to quality housing and consumer protection.
This article will delve deep into the BC New Home Warranty, elucidating its features, benefits for presale condo buyers, and why it’s a pivotal aspect of new home ownership in the province.
What is the BC New Home Warranty?
The BC New Home Warranty is a mandatory insurance program tailored to safeguard new home owners from potential construction defects in their new homes and presale condos. This program is managed by the BC government who does not provide the warranty. Warranties are provided by third party warranty providers and the BC government oversees and manages the system.
Part of the Home Owner Protection Act, it is recognized as one of Canada’s premier new construction home protection mechanisms, it ensures that homes in BC adhere to the highest construction and design standards.
The warranty program is also part of the system that ensures that new construction projects in this province are built according to related city and BC building code and with all necessary permits, including a building permit, by a licensed residential builder.
BC New Home Warranty – Home Warranty Coverage Details
The New Home Warranty in BC often referred to as the 2 5 10 Warranty offers a tiered coverage system to ensure comprehensive protection for presale condo and other new home buyers:
2 Years on Labour and Materials
This encompasses:
- 12 months of coverage for construction defects that include materials and labour defects in detached homes and non-common property in strata units.
- 15 months for the common property of strata buildings.
- 24 months for specific defects in all new buildings, such as issues with delivery systems, exterior components, and more.
5 Years on the Building Envelope
This primarily focuses on protection against external threats, especially unintended water penetration.
10 Years on the Building Structure
This is a long-term assurance that the primary structural elements of your home are free from defects. A structural defect in a building can be catastrophic and this warranty program can mitigate that risk.
One of the standout features of this warranty is its transferability. The warranty is linked to the home, not the owner, ensuring that even if the property changes hands, the warranty remains intact.
When Does the Warranty Start?
The start date of the warranty coverage varies based on the type of home. Please see the warranty start dates below:
- Detached Homes:
- Custom homes: The date of first occupancy, the date of the first occupancy permit, or when the custom home is ready for occupancy, whichever comes first.
- Speculative homes (pre-built for the market): The date of first occupancy or the transfer of legal title to the first owner, whichever is earlier.
- Strata Homes Including Presale Condos & Townhouses:
- Strata unit (these are typically what presale condos are): The earlier of the date of first occupancy or the transfer of legal title to the first owner.
- Common property: The earlier of the date of the first unit’s occupancy in the strata building or the transfer of legal title to the first owner in the building.
Identifying and Reporting Defects – Defect Reporting Process in BC
A construction defect is considered a breach of contract, something that was promised but is now defective or not functioning. However, poor workmanship is not deemed a defect unless identified during the deficiency walkthrough before possession. If a defect arises due to owner negligence or lack of care, it might not be covered.
To ensure that defects are identified and reported promptly:
- Conduct regular inspections, especially at key warranty expiration points: 12 months, 2 years, 5 years, and 10 years. For single family houses, it’s advisable to hire a professional inspector or in the case of a strata titled property to have an engineering company, especially for the 5 and 10-year marks.
- If you discover a defect, report it within a reasonable time frame before the applicable warranty coverage expires.
- Provide a detailed claim, including a cover letter with relevant details, a copy of the warranty certificate, prior correspondence related to the defect, and any other supporting documentation like inspection reports.
Exclusions and Limitations in the 2-5-10 Warranty
While the New Home Warranty in BC offers comprehensive coverage, certain exclusions apply:
- General Exclusions: Landscaping, non-residential detached structures, commercial use areas, roads, curbs, lanes, site grading, surface drainage, municipal services operation, septic tanks and fields, and water quality and quantity.
- Defect-Related Exclusions: Normal wear and tear, shrinkage of materials from construction, non-residential use of the new home, materials, labor, and design provided by the owner, damage caused by anyone other than the builder, damage from insects or rodents, owner’s failure to prevent or minimize damage, and acts of nature.
Coverage limits also exist. For detached homes, the coverage is the lesser of the first owner’s purchasing price or $200,000. For strata homes, the limit for individual units is the lesser of the first owner’s purchase price or $100,000. For common property, it’s the lesser of $100,000 times the number of dwelling units in the building or $2.5 million per building.
2-5-10 Warranty Example
Here is an example of what a 2-5-10 new home warranty coverage insurance coverage document looks like. (see below)
Navigating the Exemptions
While the New Home Warranty in BC is comprehensive, certain exemptions apply:
- Owner Builder Exemptions: Homes constructed under specific authorizations may not fall under the standard warranty but are covered by other protective provisions.
- Specific Property Types: Some categories of homes, such as manufactured homes or dormitories, might have different warranty requirements.
- First Nations Lands: Homes on specific lands, like First Nations reserve lands, might have unique regulations. It’s essential to be aware of these nuances.
Why do we have a BC Home Warranty?
In the late 1970’s and early 1980’s energy prices surged for political reasons. To reduces energy consumption, the Federal Government changed the way buildings were constructed to make them more energy efficient in terms of heating. This involved sealing the walls of buildings, which was effective in reducing energy consumption most of Canada due to cold dry conditions in winter for most of the country.
In coastal British Columbia, it was catastrophic due to BC’s coast has warm wet windy winters and created the Leaky Condo Crisis.
Leaky Condos got us a Warranty on New Homes in BC?
The BC Leaky Condo Crisis refers to a widespread construction and financial debacle in British Columbia, Canada, during the 1980s and 1990s. Thousands of condominiums, built during this period, suffered from severe water infiltration problems, leading to rot, mold, and structural damage. The crisis was a result of a combination of factors, including inadequate building design, poor construction practices, and a shift towards more energy-efficient buildings, which inadvertently trapped moisture.
The architectural trend of the time favored the “California style” with flat roofs and minimal overhangs. While this design was aesthetically appealing, it was ill-suited for the wet climate of the Pacific Northwest. The absence of overhangs meant rainwater would run directly down the sides of buildings, increasing the chances of infiltration. Additionally, the push for energy efficiency led to tighter building envelopes, which, while conserving energy, also trapped moisture inside, exacerbating the problem.
The consequences of the crisis were devastating for many homeowners. Repairs were often extensive and costly, sometimes exceeding the original purchase price of the condos. Many owners found themselves in financial ruin, unable to afford repairs or sell their properties. The emotional and health impacts were significant as well, with residents facing stress, displacement, and health issues from mold exposure.
In response to the crisis, the provincial government introduced reforms to building codes, emphasizing rain-screen systems and better moisture management. The Homeowner Protection Act was established in 1998, setting up the Homeowner Protection Office (HPO) to regulate residential builders and oversee third-party home warranty insurance. The Act aimed to protect consumers and restore confidence in the residential construction industry.
The Leaky Condo Crisis serves as a cautionary tale about the importance of considering regional climate in architectural design and the potential consequences of prioritizing aesthetics over functionality. It underscores the need for rigorous building standards and consumer protection mechanisms in the housing market.
Warranty Providers in BC
These are some of companies that are third party private new home warranty providers for presale condos in BC:
- Aviva Insurance Company of Canada
- Echelon General Insurance Company
- Intact Insurance Company
- The New Home Warranty Insurance (Canada) Corporation
- Travelers Insurance Company of Canada
- Trisura Guarantee Insurance Company
- National Home Warranty
- Progressive Home Warranty
- Pacific Home Warranty
BC New Home Warranty FAQ
Is the warranty transferable?
Yes, the warranty is attached to the home, not the owner. If the home is sold, the warranty remains in effect for its remaining duration.
How do I know if my home is covered?
All new homes constructed under building permits applied for on or after July 1, 1999, in BC should be covered by the warranty, unless they fall under specific exemptions.
What is a defect?
A defect in construction is viewed as a violation of the contractual agreement, representing a failure to deliver what was guaranteed, either through a flaw or malfunction.
What should I do if I discover a defect in my new presale condo?
If you identify a potential defect, you should first consult your warranty documentation to understand your coverage. Then, contact your home warranty insurance provider to report the issue and seek guidance on the next steps.
Does the BC New Home Warranty cover renovations?
The primary focus of the warranty is on new home constructions. However, some providers might offer coverage for building envelope renovations. It’s essential to check with your provider for specifics.
How does the BC New Home Warranty compare to warranties in other provinces?
The warranty is recognized as one of Canada’s strongest construction-defect insurance programs. While each province may have its own warranty program with varying coverage, BC’s program is renowned for its comprehensive protection.
When does the warranty coverage start for presale condos?
For strata homes, including presale condos:
- The coverage for the individual strata unit starts on the date of the first occupancy or the date of transfer of legal title to the first owner, whichever occurs earliest.
- The coverage for common property begins on the date of the first-unit occupancy or the date of transfer of legal title, whichever is earlier.
What is not covered by my BC New Home Warranty?
- The BC New Home Warranty excludes landscaping, non-residential structures, commercial areas, roads, wear and tear, owner-provided materials, and damage from nature or third parties. Always check your warranty documentation for specific exclusions.
BC Housing’s role in the 2-5-10 Warranty Program?
- BC Housing is the regulator who oversees the home warranty insurance coverage in this province.
Does the BC Government Provide the 2-5-10 Year Warranty in BC?
- No. The BC government is not the warranty provider. The provincial government oversees and regulates the warranty system. The warranty’s are actually provided by private companies often referred to as third party warranty provider.
Is home insurance the same as the New Home Warranty Program
- No. Home insurance insurance provides protection for your house and possessions against theft, loss, or damage. The New Home Warranty Program protects against construction defects and failures.
Can any Home Builder give this warranty in BC?
- No. Only licensed builders can offer the BC New Home Warranty. To find out if the residential builder or developer you are thinking of buying a new construction home is licensed, please see this link to the Licensed Builder Registry for BC.
Does the BC New Home Warranty cover exterior cladding and siding?
- Yes. Exterior cladding and siding is part of the building envelope and covered by the 2 5 10 Warranty.
What specific details should I know about home warranty coverage in BC?I
- in BC, the 2-5-10 home warranty is a comprehensive program that includes a 2-year warranty on labor and materials, a 5-year warranty on the building envelope, and a 10-year warranty on the structure. It’s designed to protect homeowners from defects in materials and workmanship.
How do I report a defect under the BC 2-5-10 warranty?
- To report a defect under the BC 2-5-10 warranty, homeowners should contact their warranty provider directly. Documentation of the defect and adherence to reporting deadlines are crucial for a successful claim.
When does the 2-5-10 warranty coverage start for new homes in BC?
- The 2-5-10 warranty coverage in BC typically starts on the date of the first occupancy of the home or the date the home is transferred to the first owner.
Are there any specific exclusions in the BC 2-5-10 home warranty program?
- The BC 2-5-10 home warranty program excludes non-residential structures, normal wear and tear, and issues resulting from homeowner negligence or natural disasters. Specific details of exclusions are outlined in the warranty documentation.
Presale Condo Warranty Pro Tips
When buying a presale condo here are some simple tips that can save a large amount of hassle and time if a warranty claim is required.
- Take photos when you are doing your deficiency walk through of anything that might be of concern. Warranty providers are large bureaucracies and need, among other things, visual confirmation of issues to be able to assist.
- Work with a Realtor who understands presale condos (like us!) and how the warranty system works so they can be a resource if there is an issues.
- Keep and save and/or scan and save all your warranty documents in a safe place so they cannot be lost or mislaid.
Conclusion
This warranty is more than just an insurance program; it’s a testament to British Columbia’s commitment to quality, safety, and homeowner satisfaction. Whether you’re a seasoned homeowner or stepping into the realm of property ownership, understanding the New Home Warranty in BC is essential. It not only offers peace of mind but also ensures that your investment remains protected and valuable for years to come.
Written by Mike Stewart Realtor – One of BC’s top presale condo specialists. Feel free to contact Mike with any questions.