The New Home Buyer Protection Act took effect on February 1, 2014. The Act applies to new homes constructed with a building permit applied for after February 1, 2014.
These are some common questions about the New Home Buyer Protection Act. If you don't see an answer to your question, please contact us toll-free at 1-866-421-6929.
Homes that are covered
The New Home Buyer Protection Act applies to new homes constructed with a building permit applied for after February 1, 2014. The legislation covers single family homes, duplexes, multi-family homes, condominiums, manufactured homes (including ready to move homes), and recreational properties. The legislation does not cover dorms, work camps, hotels and rental apartments.
If you are an individual constructing your own home to live in (owner-builder), you have two options. You can get home warranty coverage for your home or you can apply for an owner-builder authorization, which, if approved, will allow you to build your home without a warranty. If you sell your house within 10 years, you will need to obtain the remaining warranty coverage for your buyer.
Any manufactured/modular or ready to move homes moved to Alberta from another province or country would be required to carry warranty if they were new enough to fall under the warranty periods. For example, a manufactured home that is four years old and is being moved into Alberta from Saskatchewan would have to have warranty of one year for building envelope and six years for major structural.
Minimum coverage terms
New home warranty requirements provide the following minimum terms:
- 1 year for labour and materials;
- 2 years for delivery and distribution systems
- 5 years for building envelope protection
- 10 years for major structural components
To learn more, view a one-minute information video on warranty coverage.
The building envelope is the shell of the home, including the roof and walls. It is the separation between the interior and exterior environments of a building, which protects the indoor environment and facilitates climate control. The building envelope is a common area of failure and issues can take at least 3 years to emerge.
Time for building envelope coverage
Research indicates that it takes at least three years for building envelope issues to become apparent.
BC has offered five year building envelope coverage for the past 10 years, and that has proven to be effective and has helped lead to an improvement in the standard of construction in that province.
In Alberta, the New Home Buyer Protection Act provides a minimum five years coverage, with the requirement that builders offer home buyers the option of purchasing additional years of building envelope coverage.
Major structural coverage
Major structural includes the frame, including the roof’s structural integrity, and the foundation.
Coverage limit/rebuild amount
The coverage limit/rebuild amount is set at $265,000.
The coverage limits are based on the average cost of rebuilding a home. This includes the structure and does not include the land costs, contents, landscaping etc. A homeowner can choose to buy additional coverage if they want. The limit must not be less than the original purchase price or $265,000 for a single-family home and $130,000 on multi-family units. There is also up to $3.3 million in additional coverage for common property in each building of multi-family projects. This ensures multi-family units have equal coverage to single family homes. More information and details are available in the regulations.
Warranty coverage costs for home buyers
It is expected that new home warranty will add about $2,500 to the cost of an average home. Exact cost will vary, depending on the warranty provider, the builder, and the home.
In January 2012, the average price of a home in Alberta was $342,000. Based on that average, warranty coverage would cost less than one per cent the price of the home, and less than many of the upgrades often made to a home during construction to protect the biggest investment most people make.
At the time of purchasing warranty coverage, the warranty provider must offer the builder the option to purchase an additional two years of coverage for defects in the building envelope.
Building and renovating
The builder will be required to provide mandatory home warranty protection when 75 per cent or more of a rebuilt home is additional new construction as a result of major renovation. More information will be available in the Registrar Bulletins.
Building permits for professional builders
Professional builders can take the following steps to obtain a building permit:
- Find a warranty provider willing to provide coverage on your construction projects. Builders can find more information about working with a warranty provider in Alberta’s New Home Buyer Protection Act for Small Builders.
- Contact Municipal Affairs to become an authorized user of the online new home registry.
- After receiving your user authorization, create your builder profile.
- Enter a construction project in the registry. This will include identifying the company that will provide warranty coverage on the project and paying the applicable fee.
- After your warranty provider confirms coverage and the project registration is approved, you will be able to receive a building permit.
Owner builder authorization for owner builders
After February 1, 2014, owner builders will take the following steps to apply for an owner builder authorization:
- Contact Municipal Affairs to become an authorized user of the online new home registry.
- Apply for an owner builder authorization online. This will include stating your intent to live in the home, indicating whether you have a registered interest in the land, and paying the applicable fee of $750.
- Your application for owner builder authorization will be assessed. If it is approved, you will be able to apply for a building permit.
Search for warranty coverage or an owner builder authorization for a project
Permit issuers will be able to use the Government of Alberta’s online new home registry to determine whether warranty coverage or an owner builder authorization is in place on a project. As well, the system will enable builders and owner builders to provide printed confirmation, if required by the permit issuer.
If builders are in financial trouble
If your builder is experiencing financial problems or has filed for bankruptcy, you may be left with an unfinished home and a number of subcontractors wanting to get paid. It is very important that you take appropriate measures to inform and protect yourself.
You may want to consider contacting:
- Your warranty provider. Some warranty providers may have offered deposit coverage at the time of purchase. For more information, contact your warranty provider directly. If you do not know your warranty provider, please refer to your new home warranty insurance contract documentation provided by your builder, or search the public registry using your legal land description (i.e. ATS or lot/block/plan). Please note, homes where the building permit was applied for before February 1, 2014 will not appear on the registry.
- The Superintendent of Bankruptcies to find out if there is a trustee for your builder’s case. For more information, visit: Office of the Superintendent of Bankruptcy Canada
- Your local municipality or permitting agency. Stop Work Orders may have been issued by the municipality under the Safety Codes Act, which could prevent construction of your new home from continuing. For more information on the status of permits and if an Order has been issued, please contact your local permit issuer. To find out who to contact in your area, go to: Municipal Affairs: Where can I get a Permit?
- Your bank. There are many factors that might complicate your ability to access money and impact your credit rating.
- A Home Inspector to do a walk through of your house. Home inspectors are licensed in Alberta and can assist in telling you about the physical condition of your home. For more information visit: Hiring a Home Inspector
- Service Alberta. Service Alberta may get involved if the builder continued to enter into contracts and take pre-payments even though they knew that they would be declaring bankruptcy. For more information visit: Service Alberta Consumer Protection Office
- Legal counsel. Liens might be filed against your property by subcontractors, in excess of the holdback. A lawyer will know how to have the liens discharged. For more information, visit: Alberta Law Society Lawyer Referral
Please note, this information is intended to provide general information only and should not be substituted for legal advice.
How to know which builders are a good risk
Buyers should research the builders they are considering contracting with to build their new home, including how long the builder has been in business and asking for and following up on references.
Alberta’s new warranty program includes an easy-to-use online public registry. People shopping for a new home will be able to use the registry to find out if the home has a warranty and how much coverage remains.
If your home has a warranty under the new program, you’ll be able to access warranty information by simply typing in the address of the home. This will help you track key dates and find contact information for your warranty provider.
The registry may also be accessed by realtors, lending institutions, lawyers and others.
To learn more, view a one-minute information video about the public registry.
Making a warranty claim
A homeowner experiencing an issue with the new home should do the following:
- Get to know your warranty dates to ensure coverage is active for the issue you’re experiencing.
- You may contact your builder directly to discuss the issue and attempt to resolve it.
NOTE: Contacting your builder does not mean you’ve made a claim under your warranty policy.
- If you still need to make a claim, contact your warranty provider. Every provider’s process is unique–they will guide you through their specific requirements and procedures.
To learn more, view a one-minute information video about the warranty process.
Be sure to read your warranty policy carefully in order to find out what is covered, including any conditions, exclusions, expiry dates, or claim reporting cut-offs that you need to be aware of. If you need more information regarding a dispute, please visit the Superintendent of Insurance’s consumer information.
Concerns about your warranty claim
The administration of the residential warranty requirements under the New Home Buyer Protection Act is a joint effort between Municipal Affairs, Alberta Treasury Board and Finance and Service Alberta. If a claim dispute occurs between a homeowner and their warranty provider, there are a number of options that could be pursued to resolve the claim.
Option 1: Deal with the Insurer
- Discuss with the applicable warranty provider the various issues that may be delaying the settlement of the claim.
- Escalate the issue to the applicable supervisor or manager if settlement is not achieved.
- If the claim is still not addressed, contact the complaint liaison officer / ombudsperson that works for the insurance company that underwrites the warranty contracts for the applicable warranty provider.
- The Public Registry allows homeowners to search for warranty information for their new home along with the name of the warranty provider and insurance company. Builders are required to input warranty information for every new home they built after February 1, 2014 on the Public Registry.
Option 2: The Dispute Resolution Process
- If the claim issue pertains to a disagreement about the value of the insured property, the value of the property saved, the nature and extent of the repairs or replacements required, or the amount of the loss or damage, those questions must be determined using the Dispute Resolution Process set out in section 519 of the Insurance Act.
- Both parties identify a representative that will work to reach an agreement. If agreement cannot be reached, an umpire is appointed and they will issue a final and binding decision.
Option 3: Contact the General Insurance OmbudService
- The General Insurance OmbudService (GIO) is an independent organization that helps consumers resolves disputes or concerns with their insurance company.
- GIO can help address consumer concerns about claims, interpretation of policy coverage, and policy processing and handling.
- GIO can be contacted at 1-877-225-0446 or via www.giocanada.org.
Additional information on the above options can be found on the Treasury Board and Finance website under the office of the Superintendent of Insurance, at Getting your Insurance Claim Settled: Know your Options.
Option 4: Contact Service Alberta
- Some claims may also fall under the Consumer Protection Act, under the Ministry of Service Alberta, which protects consumers from unfair business practices before, during or after a consumer transaction.
- The Consumer Investigations Unit (CIU) investigates complaints from Albertans about consumer transactions where a business has breached Alberta’s consumer protection laws. For more information on the consumer complaint process, please visit www.servicealberta.ca/file-a-complaint.cfm. Should you decide to submit a complaint to the CIU, you can do so at www.servicealberta.ca/File-a-consumer-complaint.cfm.
Condo purchasers have the same warranty protection as that available to single family homes - one year on labour and materials, two years for defects in labour and material related to delivery and distribution systems, five years on building envelope (with the option to purchase additional coverage), and 10 years on major structural.
Determination of the commencement date for warranty coverage on common property and common facilities includes the builder entering into an agreement with a qualified person to complete a Building Assessment Report (BAR). Detail around timelines, submission, the form of the report, etc. is included in the regulations. More information on the BAR is available in the Registrar Bulletins.
Buildings that are converted into condos
This includes conversions such as rentals to condos and industrial/commercial space converted to residential condos.
For buildings that are less than 10 years old, warranty would be required for major structural. If the building is less than five years old, then building envelope coverage would also be required. For buildings more than 10 years old, warranty would not be required unless the conversion met the reconstruction threshold.
Municipal Affairs will develop guidelines and assist municipalities in determining when the threshold for substantial reconstruction is met.
Municipalities and proof of warranty
Municipalities and permit issuers will be required to check for proof of warranty before issuing construction permits. They will have access to an online database to confirm warranty coverage.
The New Home Buyer Protection Act does not affect a municipality's requirement to comply with the Safety Codes Act. Accountabilities set out in the Safety Codes Act, and the accreditation agreement remain the same.
Municipalities will have to do a small amount of additional data entry upon issuing the permit.
Municipal Affairs has provided information to assist municipalities in meeting the new requirement.
Number of inspections done to a home under construction
Based on what we’ve seen in other jurisdictions that have implemented mandatory warranty programs, we expect warranty companies could increase the number of inspections they conduct on new homes in order to manage their risk. These inspections would not replace or supersede those required by the quality management plan.
How to get a warranty
The home warranty coverage will already be in place when you buy your new home. Home buyers do not need to find a warranty provider or contact warranty companies. Builders are responsible for making sure that the home is enrolled with a warranty provider and that the right coverage terms are in place.
To learn more, view a one-minute information video about providing warranty coverage.
Builder registry fee
Home builders will pay a registration fee of $95 per unit to fulfil the requirement of submitting the property to the Government of Alberta’s public registry. This fee will cover the cost of operating the public registry. The public will be able to access the public registry and look-up the status of a home warranty at no cost. Owner-builders will also be required to pay an application processing fee of $750.
Builders can find more information about working with a warranty provider in Alberta’s New Home Buyer Protection Act for Small Builders.