New Home Buyer Protection Act [Complete Guide]

The new homebuyers throughout Canada have profited greatly from its implementation. It has upgraded the residential construction value and strengthened the consumer protection act of Alberta.

The act applies to all new homes, including building permits submitted from February 1, 2014, onward. If you own a new home in Canada, you must have detailed knowledge about the NHBPA. Read the article for details.

What is the New Home Buyer Protection Act?              

The New Home Buyer Protection Act (the NHBPA) is legislation intended for new home buyers in Canada. It sets out the licensing of residential builders.

In addition to this, it makes third-party home warranty coverage obligatory for new home construction. The legislation applies to;

  • New home built by a residential builder on land owned by a residential builder. Here, the land title is transferred to the owner by the residential builder.
  • New home built by a residential builder on land owned by the owner
  • New home built by a residential builder on land which the owner does not own. So, the Alberta new home warranty transfer of land title is not possible.

The Coverage Term of NHBPA

Before the NHBPA, the requirements for minimum coverage were not planned, and home warranties were not obligatory.

Now the new home warranty program includes;

1-Year Labour and Materials (“Bumper to Bumper” warranty)

This coverage includes finishing the whole house, including any defects in paint, flooring, trim, etc.

2-Years Delivery and Distribution System

It mainly covers defects in materials and labor associated with the delivery and distribution system. For Example – plumbing, heating, and electrical systems.

5-Years Building Envelop

The building envelope includes the walls, roof, windows, and foundation. This coverage protects the owner in case of water leaks through the roof or ground. However, the defects must be because of the original workmanship. The coverage should be two additional years as an option.

10-Years Structural

This coverage looks after the main structural components of the home, including its foundation and frame.

The homeowners can also get compensation because the home is uninhabitable because of defects. So they have to live somewhere else while the new home warranty Canada work is ongoing.

Warranty coverage has financial limitations that apply to 1, 2, 5, and 10-year coverage terms. So homeowners have to be aware. Often additional warranties are offered that outshine the above coverage terms. The homeowners must obtain the optional insurance if available.

Things to Keep in Mind

A homeowner must take a few steps with its warranty provider to enable warranty coverage when a defect is discovered. There are many warranty providers in Canada.

Each warranty provider follows a few steps, and each step has different timing. If the homeowner misses any step or a deadline, the coverage may be denied. Most of these deadlines are strict and cannot be extended.

However, the homeowner can challenge the warranty provider if the warranty coverage is denied. They can take their argument to arbitration, where an arbitrator is employed. In arbitration, both parties appear to decide the dispute.

Hence, this process can be complicated and time-consuming. It is not like a trial where witnesses need to be called. Here, the decision of an arbitrator is final. This decision is binding on the builder, homeowner, and sometimes, the warranty provider.

What Types of Buildings are Covered in NHBPA and What are not?

All new residential construction built under a permit applied after February 1, 2014, is included in the NHBPA. All single and multi-family homes, modular, condo, manufactured homes, cottages, and cabins are included.

The rental indemnities must be listed in the New Home Buyer Protection Office. This also applies to significant renovations if 75% of the project is new construction.

However, the New Home Buyer Protection Act declaration doesn’t apply to apartments and rental buildings. Also, it doesn’t apply to hotels, motels, care facilities, dormitories, relocatable work camps, etc.

What Warranty do Providers Consider Before Establishing a Relationship Builders?

The warranty provider evaluates a new builder by considering the following things;

  • Experience and Training – First, the warranty provider will examine the builder’s experience. They will check if the builder has experience in working with another experienced builder or expert trades.
  • Claim History – The warranty provider will check if the builder has a claim history. If the builder has a history of leaving another warranty provider, they will try to find the reasons behind this. The warranty provider may dismiss the relationship if they find the builder has many homes but with warranty claims.
  • Financial Solvency – The warranty provider will look into the builder’s assets, credit history, and liabilities.

If the warranty provider finds a good track record of the builder, they may not inspect further. Usually, inspections costs are included in their fees. If they conduct an inspection and find poor quality work, they will ask for more inspections.

Final Words

The New Home Buyer Protection Act can aid the new homebuyers immensely. At the same time, the Alberta new home warranty coverages have several traps and mazes. A homebuyer can easily fall into it and get lost.

So, you have to keep your eyes and ears open in this case. Understand each warranty program and do your own research. Choose a reliable warranty provider and get in touch with them for your best interest. In this regard, a real estate lawyer can help you.