Warranty. It’s fine print that is often overlooked but is usually quite important; especially when making a big purchase - one as big as your new home. New home warranty, mandatory under Alberta’s New Home Buyer Protection Act (NHBPA), can vary depending on the type of home you buy (i.e. single family home versus a condo), so it’s important to make sure you understand yours fully.
What Does The NHBPA Do?
The NHBPA introduced three main stipulations for builders and buyers. First, the warranty on each new home that had a building permit application submitted after February 1, 2014, is required to provide “1-2-5-10” coverage (more on that below). Second, a government-managed registry will ensure the public has access to key dates and specific information about new home warranties. Third, every homebuilder is required to provide proof of warranty coverage in order to get a building permit in Alberta.
What Is “1-2-5-10” Coverage?
“1-2-5-10” coverage is the mandatory warranty coverage required by the New Home Buyer Protection Act. In short, the coverage ensures the following:
- 1: One year of coverage for finishes throughout the home, including any defects in flooring, paint or trim.
2: Two years of coverage for defects in materials and labour related to heating, electrical and plumbing systems.
- 5: Five years of coverage for defects in the building envelope. This means the exterior shell of the home, including the roof and walls.
- 10: Ten years of coverage for the key structural components of your home, including its frame and foundation.
Warranty Protection And Your Home
Within the NHBPA there are different coverage limits, conditions and commencement dates for different residence types. For example, a single-family home and a multi-family building under the responsibility of a condominium board will have different warranty conditions. As most of StreetSide Development’s homes fall under the responsibility of a condominium corporation and the relevant bylaws, it’s important to understand the warranty conditions that apply to condo living.
Individual Property Versus Common Property
Warranty coverage limits for properties are generally applied to individual property and common property. Individual property would apply to individual unit space, be it a detached single-family home or a condominium unit within a condominium complex. Common property would be classified as property for which a condominium corporation is responsible under its bylaws. Individual property and common property have different payouts. It depends on the type of property, as well as the number of units in the building.
Just because your property falls under a condominium plan does not mean there is both individual and common property. For example, a townhome neighbourhood may fall under a condominium plan, but may not have any common property shared by all homeowners. A condo building will often include common areas such as a lobby and terrace space. These are considered common property and shared by all homeowners, and thus fall under warranty coverage.
Warranty Coverage Limits For Condominium Properties
Warranty coverage limits for individual property and common property that fall under a condominium plan are as follows:
- For a multi-family unit registered under a condominium plan coverage is limited to 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, coverage is limited to $130,000 times the number of single units in the building to a maximum of $3,300,000 per building.
Commencement dates also differ by property type. When reviewing your warranty plan, it is important to note the commencement dates that apply to your property. For condo owners, there are a few important details to understand that differ based on property type. For both a non-condominium multi-family unit without common property and a multi-family unit registered under a condominium plan the commencement date is the earliest of one of the following two circumstances:
- The date a new home is first occupied, or;
- The date an accredited agency, municipality or regional services commission grants permission to occupy a new home.
For more info on commencement dates as well as conditions for warrantable common property you can visit the Alberta New Home Warranty Program website.
It Never Hurts To Ask!
We get it. When it comes to your warranty, the information can be difficult to understand. Whether it’s warranty coverage, commencement dates, or any other part! Alberta’s New Home Buyer Protection Act has made it easier by setting coverage standards for all new home builds, but every builder and every property is different. If you need help understanding your warranty coverage, don’t hesitate to ask your sales team or development representatives. That's what we are here for.