Peace of Mind with New Home Warranties

There’s a lot to keep in mind when buying a new home. It’s at once both an incredibly exciting and incredibly stressful experience. There’s so much to think about, from the minutiae of the sale to the logistics of the move to all the financial hoops that need to be jumped through – it’s enough to turn anyone’s brain inside-out!

One of the critical details that often gets lost in the shuffle when purchasing a new condo unit is typically among the most important: your new home warranty. That all falls under the New Home Buyer Protection Act – legislation specifically designed to protect the interests of new home buyers here in Alberta.

Whenever you start talking about warranties and legislation, things can get pretty complicated. Luckily, we’ve got Dustin Gutsche – Catalyst’s Project Manager to help us through the ins and outs.

Five Things to Know About New Home Warranties

1. First Thing’s First – Where Do New Home Warranties Come From?

While you might be too wrapped up in the hustle and bustle of buying a new home to pause to think about your warranty, don’t worry – you won’t miss out.

“New home warranties are a requirement under the Alberta New Home Buyer Protection Act that condo and townhome sales need to adhere to as well,” Gutsche began on the subject. “All developers constructing residential buildings must register the building with a warranty provider such as National Home Warranty or Alberta New Home Warranty Program – with the ANHWP being the most common warranty provider.”

2. Are All New Home Warranties the Same?

Yes – and no. While there are minimum levels of coverage as legislated by the New Home Buyer Protection Act, the way those warranties are applied and initiated can sometimes vary from property to property.

Gutsche explains: “It’s a little frustrating that there isn’t a set standard yet, but the reality is that different developers go about new home warranties in one of two different ways. First, for some types of condo properties – such as townhomes, for example – we get a warranty for each chunk of the property that gets developed simultaneously. So, if two or three blocks of homes are completed at the same time, we get a warranty for those two or three blocks all at once because the start of the warranty is when they turn over those buildings.”

That all makes sense enough – what’s the second approach that developers take, then?

3. The Second Approach to New Home Warranties

The second way that developers can tend to approach New Home Warranties tends to be a bit more complex than the first.

“Sometimes, when developers build an apartment-style condo building,” Gutsche continued, “they’ll provide a separate warranty for each unit owner, each of which starts when that specific property is sold – so, there’ll be hundreds of warranties across the building, and it’s up to each owner to deal with each of those. However, because each warranty is meant for each individual unit, it’s tough to get warranties for the building as a whole. So, if an owner has one year of coverage for labour and materials, that year doesn’t start when the owner buys the property or moves in – it starts when the building is reconciled as substantially complete (typically when it’s about 90% done).”

“This means,” Gutsche pointed out, “that the building could sit empty for eight months before somebody buys their unit – at which point they’ll only have four months left on their labour and materials warranty.”

That sounds like a bit of a raw deal, right? As Gutsche points out, though, it’s typically the spirit of the law that most developers will honour rather than the letter of it: “Most of the time, though, when a developer sells you a unit, they’ll give you time to figure out that hey, this appliance doesn’t work, or that bit wasn’t installed correctly, etc. – they’ll usually honour that regardless of warranty because it’s ultimately a builder defect that they’re responsible for regardless.”

While it’s helpful to know that developers will typically work with owners on these issues (within reason!), it’s also worth going into those sorts of situations with eyes wide open – particularly when you won’t have the legalities of a warranty to fall back on in the event of a problem.

4. So, What Do New Home Warranties Cover, Then?

Under the New Home Buyer Protection Act here in Alberta, new home warranties are legislated to cover the following shorter-term issues:

  • One year for labour and materials. This clause of your new home warranty covers any defects in materials and labour related to how the home was constructed and materials used. This may include flooring, staircases, baseboards, cabinets, railings, and other trim and fixtures.
  • Two years for delivery and distribution systems. This guarantees coverage of defects related to the electrical, plumbing, heating, ventilation, and air conditioning delivery systems of your new condo unit.

5. What About Issues Covered Over the Long-Term?

New home warranties in Alberta don’t just stop at two years of coverage – they also include the following considerations:

  • Five years for building envelope protection. Your condo’s building envelope is the shell of your home – including the roof and walls. It is the separation between the interior and exterior environments of a building that protects the indoor environment and facilitates climate control. The Act requires a minimum of five years of coverage, with the requirement that warranty providers offer builders the option of purchasing an additional two years of building envelope coverage at their discretion.
  • Ten years for major structural components. Major structural components consist of the frame – including the roof’s structural integrity and the building’s foundation – all of which are covered for ten years’ time.

Thanks once again to Dustin Gutsche for all his knowledge and expertise – is there anything you don’t know about condo living in Alberta?? 😆

Are you looking to learn more about new home warranties? Need help following through on a claim for your unit or building? Contact us at Catalyst Condo Management today, and we’ll help steer you in the right direction!