New Home Warranty & Pre-Possession Walk Through

Mandatory Warranty 1-2-5-10: Protection for every homebuyer

Alberta’s New Home Buyer Protection Act (NHBPA), which took effect in February 2014, reflects the Government’s desire to ensure all new homebuyers receive warranty protection, clear expectations and an ownership experience protected from unpleasant surprises – the benefits our Builder Members’ customers have been enjoying for over 40 years.

According to the new legislation:

Every homebuilder must provide proof of warranty coverage to obtain Alberta building permits
A Government-managed registry will provide public access to key dates and specific information about new home warranties

At a minimum, the warranty on each new home whose building permit application was submitted after February 1, 2014, will provide “1-2-5-10” coverage.

1 Year Labour & Materials

Mandatory warranty includes one year’s coverage for defects in materials and labour. This addresses issues with the way your home was built or the materials it was built with. It includes such items as flooring, trim and fixtures.
For a single-family home, a multi-family unit or multi-family common property, this coverage applies for one year starting on the warranty commencement date.

2 Year Distribution Systems

A new home warranty must cover defects in labour and materials related to heating, electrical and plumbing systems for two years from the warranty commencement date. This applies to single-family homes, multi-family units and warrantable multi-family common property.

5 Year Building Envelope

Homebuilders in Alberta must provide five years’ coverage for defects in the building envelope, which the New Home Buyer Protection Act defines as the system of components that separate the controlled interior air from the exterior (for example, the wall framing and cladding, roof and window installation).
This coverage spans five years from the warranty commencement date for a single-family home or for multi-family common property.
Warranty providers must offer an optional two-year extension on building envelope coverage for a total of seven years’ coverage.


10 Year Structural Integrity

Mandatory warranty covers the key structural components (for example, the frame and foundation) of single-family homes and multi-family dwellings for 10 years from the warranty commencement date. Coverage applies to defects in material and labour that result in the failure of a load-bearing part of the new home or cause structural damage that materially and adversely affects the owners’ ability to use and safely occupy the home.

Living Expenses

If a new home is uninhabitable as a result of a defect or while warranty work is underway, the Program will pay up to $150 a day (to a maximum of $15,000) for reasonable living expenses incurred by the insured.

Warranty Coverage Limits

  • For a single-family home: The lesser of the purchase price (excluding land) and $265,000.
  • For a multi-family unit registered under a condominium plan: the lesser of the purchase price and $130,000.
  • For warrantable common property in a multi-family building or for the property for which a condominium corporation is responsible under its bylaws: $130,000 times the number of single units in the building to a maximum of $3,300,000 per building.
  • For a non-condominium multi-family unit (for example, a duplex unit or row townhome with no warrantable common property): the lesser of the purchase price and $265,000.

Commencement Dates

  • For a single-family home: the earliest of (1) the date a new home is first occupied; and (2) the date an accredited agency, accredited municipality, or accredited regional services commission grants permission to occupy a new home; (3) the date the transfer of title to the new home is registered. 
  • For a non-condominium multi-family unit (i.e. a duplex unit or row town home with no warrantable common property): the earliest of (1) the date a new home is first occupied; and (2) the date an accredited agency, accredited municipality, or accredited regional services commission grants permission to occupy a new home. 
  • For a multi-family unit registered under a condominium plan: the earliest of (1) the date of occupancy; and (2) the date an accredited agency, accredited municipality, or accredited regional services commission grants permission to occupy a new home. 
  • For warrantable common property in a multi-family building or for the property for which a condominium corporation is responsible under its bylaws: (1) the title to an inhabitable unit in a building or building in a phase of development of a condominium, a cooperative or multiple family dwelling is transferred from the Builder to a purchaser of a unit in an arm's length transaction; and (2) the Builder has agreed with a qualified person to have the qualified person prepare a building assessment report for the building or for a phase of development within 180 days of the transfer of title described in (1).

ENHANCED PROTECTION


Pre-Possession Insurance (single-family homes)

Deposit Insurance (multi-family units)
Extended Building Envelope Coverage
Pre-Possession Insurance
A combination of deposit insurance and home completion insurance, optional* Pre-Possession Insurance protects a purchaser’s investment in a single-family home from the time a deposit is made until the mandatory warranty commencement date. In the unlikely event of default by a Builder Member, the Program will reimburse the purchaser’s deposits up to 20% of the single-family home’s purchase price (excluding land) to a maximum of $100,000.

* Pre-possession insurance is an optional product that the Program offered via Alberta New Home Warranty. The Government of Alberta does not mandate inclusion of this coverage in a new home warranty.

Deposit Insurance

In the unlikely event of default by a Builder Member of the Program, optional* Deposit Insurance covers a purchaser’s deposits on a multi-family home up to 20% of the home price (excluding land) to a maximum of $50,000. (Maximum amount is project-specific and may fluctuate; please confirm the amount with your Builder.) Deposit insurance begins upon payment of the initial deposit under the Purchase Agreement and ends when the unit’s mandatory warranty coverage commences.

* Deposit insurance is an optional product that the Program via Alberta New Home Warranty. The Government of Alberta does not mandate inclusion of this coverage in a new home warranty.

Extended 2 year Building Envelope

Optional building envelope coverage protects purchasers from defects in the building envelope for two years over and above the mandatory five-year coverage, extending the coverage period to a maximum of seven years from the warranty commencement date.

For multi-family units, only the Builder Member or condominium corporation may opt for this additional coverage at the time of the project application.

Pre-Warranty Walk Through

Important walkthrough with the builder that should happen about 1-3 weeks before you take possession of your new home.  This important meeting allows the buyer and the builder the opportunity to:
  • Address any deficiencies that the buyer wants fixed
  • Prepare for moving day with walk through of the common areas
  • Go over any systems of the home including heat/cool, sump pump and lawn maintenance
  • Identify any paint touch ups that needs to be done
  • Make a list and mark with green tape (with instructions) of any outstanding items that needs to be completed prior for closing
  • Test all appliances to make sure they are working properly
Pro-tip: If there are any questions, ask it. If there is concern, mark it! This is your chance to make sure the home is PERFECT and the better it is communicated the easier it is to hold the builder accountable in getting it done!

Get In Touch

JAKIE NG, REALTOR® | Your Edmonton Downtown Condo Specialist

Mobile: (780) 224-5566

Phone: (780) 224-5566

Email

Office Info

RE/MAX River City

#100, 10328 81 Ave NW  Edmonton,  AB  T6E 1X2 

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