The New Home Buyer Protection Act (NHBPA) was first introduced in Alberta, Canada. The NHBPA mandates home warranty coverage for new homes, improving the quality of residential construction and providing consumer protection for buyers. If you own a new home in Alberta, it is essential to know the NHBPA and your rights as a homeowner. Save Max explains what this means for Real Estate Canada.
Under the NHBPA, all new homes in Alberta, including single-family homes, multi-family homes, duplexes, condominiums, manufactured homes, and recreational properties (starting February 1, 2014), must have minimum warranty coverage for labour and materials, delivery and distribution systems, building envelope, and major structural components.
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Why NHBPA?
Previously, there were no mandatory requirements for minimum coverage for new home warranties, and home warranties were not obligatory. he NHBPA can offer peace of mind during the first several years of homeownership by setting out minimum coverage requirements
The legislation applies to new homes built by a residential builder on land owned by a residential builder, new homes built by a residential builder on land owned by the owner, and new homes built by a residential builder on land the owner does not own. In the latter case, the home warranty coverage is provided without the land title transfer.
What does NHBPA Include?
The NHBPA includes coverage for the following:
- 1-Year Labour and Materials (“Bumper to Bumper” warranty) – includes finishing the whole house, including any defects in the paint, flooring, trim, etc.
- 2-Years Delivery and Distribution System – covers defects in materials and labour associated with the delivery and distribution system, such as plumbing, heating, and electrical systems.
- 5-Year Building Envelope – protects the owner if water leaks through the roof or ground and covers the walls, roof, windows, and foundation. It only applies if the defects result from the original workmanship; some warranty providers offer an optional 2-year extension.
- 10-Year Structural – covers the main structural components of the home, including its foundation and frame.
If a home is uninhabitable due to defects, owners may be eligible for compensation to live elsewhere while the necessary repairs are made.
Homeowners should be aware that warranty coverage has financial limitations, though optional insurance may be available to provide additional coverage.
Points to Consider
Homeowners need to keep the following points in mind:
- Each Canadian warranty provider may have different steps and deadlines to enable warranty coverage when a defect is discovered. Homeowners should review their warranty coverage documents carefully and understand the requirements and timelines they need to follow.
- Deadlines for reporting defects and making claims are usually strict. It’s essential to act promptly if you discover a problem with your new home.
- If a warranty claim is denied, homeowners may have the option to challenge the decision through arbitration. This process can be complicated and time-consuming, as an arbitrator will hear both sides of the dispute and make a final decision. This decision is binding on all parties involved, including the builder, homeowner, and sometimes the warranty provider.
- The NHBPA declaration doesn’t apply to apartments and rental buildings. Also, it doesn’t apply to hotels, motels, care facilities, dormitories, relocatable work camps, etc.
Homeowners must be familiar with the warranty details and take the necessary steps to enable coverage in the event of a defect. Prompt action and understanding the process can help ensure a smoother and more satisfactory resolution.
Additional Information
The warranty provider evaluates a new builder by considering the following things;
• Experience and Training – The warranty provider will examine the builder’s experience and check if the builder has worked with another experienced builder or expert in the 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 investigate 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. They will ask for more assessments if they find poor-quality work during their inspection.
And, Finally
Similar legislation is now present in the provinces of British Columbia and Ontario, protecting homeowners from shoddy workmanship and shady builders.
The New Home Buyer Protection Act can aid new homebuyers in Alberta immensely. At the same time, it has several traps that a homebuyer can easily fall into. So, keep your eyes and ears open and talk to a trusted professional before you become a Real Estate Canada investor.
Written by Hema Chandrashekar,
Senior Editor – Save Max
