Another reason to buy new: Peace of mind

Looking to purchase a new home? Depending on the type of home you’re buying, it’s a good idea to understand the mandatory warranty coverage required by the Homeowner Protection Office (HPO).

The provincial government set in place the 2-5-10 New Home Warranty Program in 1999 to enhance consumer protection on new home purchases. But, there are some key differences when purchasing a condo as compared to a single-family home.

If your new home is included in a strata plan, the home warranty insurance will provide coverage for your unit, plus separate coverage for the common property. For this reason, it’s important for unit owners to take the time to gain an understanding of the difference between the common property and what is unique to the individual unit being purchased.

It is important to note, the first ownership date within a strata building will commence the starting date of the warranty for the strata corporation’s common property. In the case where there is more than one building, the first owner or occupancy of each building will set the start date for the 2-5-10 coverage of each building’s common property.

It is also important to know for all building types, the insurance stays with the property, not the homeowner; so if the property were to be sold within the 2-5-10 period, the new owner will continue to receive any remaining coverage.

Home warranty insurance on new home and strata includes a minimum of two years on labour and materials, five years on the building envelope, including water penetration, and ten years on structure. There are some slight differences when purchasing within a strata in relation to the two years on labour and materials.

The two-year labour and materials coverage is broken down as follows:

Any defect in materials and labour is covered for 12 months on detached homes and on non-common property in strata units. This is extended to 15 months on common property of strata buildings due to potential for higher traffic, and wear and tear.

Defects in materials and labour related to the delivery and distribution systems, such as electrical, plumbing, heating ventilation or air conditioning, is covered for 24 months for all buildings.

The amount of financial coverage provided differs between strata and single family homes. Single family homes are covered to the lesser of the first owner’s purchase price or $200,000, whereas strata homes are covered to the lesser of the first owner’s purchase price or $100,000; and the strata corporation is covered for common property to the lesser $100,000 times the number of dwelling units in the building, or $2.5 million per building.

A pre-delivery inspection (PDI) walk-through should be performed by the builder and owner to inspect the property together prior to purchase. It is a good idea to take photos.

It is the builder who is responsible for being insured and building to code. In the case of a discrepancy, the owner should reach out to the builder. Where no advancement is made towards a resolution, the homeowner or builder can contact the insurance provider. It is always a good idea to reach out to your builder first, as the insurance company will always allow the builder the option and time to resolve the situation. If the builder cannot, or is unable to resolve the issue, only then will the insurer step in.

The HPO has a list of insurance providers, and licensed builders. Be sure to do your due diligence and check before you buy. The DPI walk-through is also key. Take your time, ask questions, and be sure you get it in writing.