Are you currently house hunting but don’t want to worry about repairs or potential problems in the near future? You may want to consider purchasing a new construction home which, by law, includes extensive home warranties for up to the first ten years of ownership.
Under the New Home Buyer Protection Act (NHBPA), which took effect back in February 2014, the government set forth requirements providing all new homebuyers with warranty protection when purchasing new construction home. Because of this, each homebuilder must contract for the purchase of a home warranty and register the warranty for every new home built in a public registry.
The public registry allows you to easily track your home’s warranty registration online. The basics of the NHBPA require that specific warranties cover different home components through years one, two, five and ten of a newly built home’s life.
Mandatory New Home Warranty
The Alberta New Home Warranty Program (ANHWP) is Alberta’s largest home warranty provider, dating back to 1974. This warranty program is a not-for-profit home warranty and insurance provider that works with approximately 700 of the industry’s home builders and renovation companies. The ANHWP administers new homebuilders’ warranties that comply with all NHBPA requirements.
Each new homebuilder is required to obtain insurance, or a home warranty, that will cover the repair of defective components of your home. Every builder that Alberta New Home Warranty Program works with must meet a certain standard and reputation and must keep up to date on multiple homebuilding and construction certifications to continue to offer warranties through their program.
Coverage starts the day you take possession of your new home and runs for one year. This is also known as the warranty commencement date.
A warranty is a promise that the newly constructed home is reliable and free from all known defects. By offering a warranty, a homebuilder protects homebuyers from any issues that might arise for a set period of time by promising to, without charge, repair or replace the defect.
ANHWP along with NHBPA define a defect as any design, construction, or material used in a new home that is in contravention to the building code, requires repair or replacement due to the negligence of the homebuilder, constitutes an unreasonable health or safety risk, or has resulted in material damage to the new home.
Basically, it means anything that doesn't hold up to code, is broken, is a risk to you and your family, or can/has caused damage to your new home would be considered a defect.
The NHBPA requires different types of warranties to extend to the first, second, fifth, and tenth years of the home’s life. Years one and two of the warranty coverage are referred to as the builder’s “indemnity period”. This means that any defects arising within the first two years (if deemed warrantable) are the responsibility of the builder. Warranty coverage past year two becomes the responsibility of Alberta New Home Warranty directly.
The warranty covering years one and two provide the most comprehensive coverage for common defects and quality of material used in a new home. Specifically, years one and two provide coverage for the items we've listed below.
One-Year Labour & Materials
In year one, the warranty covers any defect for labour and materials, which addresses any issues with the way your home was built or the materials used to build it. This one year warranty generally extends to most components of your newly built home, including:
- bathtubs and showers
- and any other part of your home that makes it liveable
The one year warranty provides that the defect will be repaired and/or any defective materials will be replaced to restore the defect to like new condition. To be covered under this warranty, you must make a claim for the defect within one year from the warranty commencement date.
For the first two years of the home’s life, the warranty covers defects in labour and materials related to the heating, electrical and plumbing systems. This includes any defects or problems that are related to the ductwork, gas lines, water pipes, waste pipes and electrical wiring within the home.
The two-year warranty provides that any defect relating to the heating, electrical and plumbing systems of a new home will be repaired or replaced. To be covered under this warranty, you must make a claim for the defect within two years from the warranty commencement date.
The Extent of Coverage
The maximum amount that of repair and replacement costs that the warranty covers varies based on the type of home.
For example, in a single-family home, townhome, row home or duplex unit, the warranty will cover the purchase price of the home to a maximum of $265,000. Any repair costs in excess of $265,000 will not be covered.
For a multi-family residential unit under a condominium plan, the warranty will cover the purchase price of the home up to $130,000, and anything beyond will not be covered.
Protection and Value
The warranties provided for the first two years of your home’s life mean you will not have to worry about any defects in construction or home maintenance for the foreseeable future. Additionally, because all home warranties are recorded in the public registry, the warranty is fully transferable to subsequent purchasers.
This is a valuable incentive to potential purchasers should you need to sell your home within the first few years of ownership. Thus, the Alberta New Home Warranty Program lets you comfortably enjoy your home for years to come without worrying about being stuck with big expenses down the road.