Understanding the 2-5-10 Home Warranty
One of the benefits to buying a brand new home is the mandatory 2-5-10 home warranty. The minimum requirements of this warranty are set out in the Home Owner Protection Act (HPA) and must meet the standards set by BC legislation. It is a requirement to have a 2-5-10 warranty for any brand new home of any type (condo, detached, duplex, townhome etc.) or substantially renovated home that was built by a licensed developer/builder. There are many different providers for home warranty insurance. Common coverage providers include: Travellers, Aviva, Echelon and Intact. Home warranty insurance providers must be authorized under the BCFSA (British Columbia Financial Services Authority).
The cost of the warranty is included in the purchase price of your new home and cannot be waived by the developer/builder. Carefully read your policy and know the terms, conditions, limitations and effective date of coverage. Pay attention to your homeowner’s manual and report any deficiencies promptly in writing to the insurer. Warranty coverage runs with the home and not individual owners. If you buy a resale property during the warranty period you will benefit from the remaining coverage on the home. As a buyer you may also ask for a claims history report from the seller if it is a resale property.
Owner-Built Homes
There is an exception to the 2-5-10 warranty for owner-built single dwelling properties. In this case, BC Housing will grant an “Owner Builder Authorization” and the home will be registered in the New Homes Registry as such. If you are unsure about the status or declaration of any newly built home, you can search details on warranty or owner-builder status on the BC Housing New Homes Registry.
During the construction of an owner-built home the owner must not hire anyone to manage the construction of the home.They are entirely responsible for overseeing the building process. Before reselling the home the owner must live in the property for one year. While owner-built homes usually do not have typical warranty coverage…the owner is still obliged to provide a statutory 10 year declaration. This declaration is similar to 2-5-10 coverage but does not have a warranty provider to back it up. If there is a claim against the declaration, the current owner may have to take the owner-builder to court if they did not comply with repairs.
There are a few other exemptions to warranty coverage including but not limited to: new homes built on First Nations Reserve Land, mobile homes, care facilities and floating homes. Please visit the BC Housing website for full details and exclusions.
Strata Properties
The strata corporation is responsible for reporting deficiencies of common property. Individual owners are responsible for reporting deficiencies within their unit. Reports must go in writing to the developer and warranty provider. It is important that strata councils manage reporting and addressing defects so they are resolved before the warranty expires.
Some strata councils do not get professional inspections before the 2,5,10 milestone years. In turn, the whole strata corporation may miss out on warranty claims. It is vital these inspections are done well before the expiry of coverage so that owners are not burdened by a costly repair that would have been covered under the warranty.
As with any strata property purchase, it is extremely important to read all strata documents so you know exactly what you’re getting into. Take note if proper 2-5-10 warranty inspections have been carried out and the developer is standing behind their work.
So, what is the actual 2-5-10 warranty?
The minimum coverage is as follows:
2 years on labour and materials
5 years on building envelope
10 years on the structure of the home
2 years on labour and materials are further broken down into:
12 months for labour on material components (flooring, doors/hardware, paint etc.)
12 months for building code violations that are deemed a health and safety risk
15 months on strata common property
24 months relating to delivery and distribution systems including exterior cladding, caulking, windows, doors, plumbing, fixtures, heating and cooling
please note appliances and other finishing components will be covered under manufacture warranties and not included within the policy
5 years on building envelope include:
any unintended water penetration or failure of water proofing that causes material damage
envelope including the exterior walls
roof, windows and doors
foundation
10 years on structural components include:
failure of load bearing walls and structure
The above outlines the minimum coverage a 2-5-10 warranty may have in British Columbia as of December 2021. Please note actual warranties may vary from provider and cover items not mentioned above. Consult with your warranty provider for more details. If you are considering buying a new home, please reach out to me with any questions you may have and I will be happy to answer them for you.
