Importance of New Home Warranties

New Home Warranties: Why is it important for Strata Corporations to complete their Common Property Warranty Reviews?

Strata Councils of newer buildings/complexes have many important tasks and responsibilities; however, there is no task or responsibility more important than ensuring that warranty reviews are completed and warranty claims are submitted, prior to the expiry of each of the respective Common Property warranties (i.e., the 15 month, 2 year, 5 year, and 10 year warranties mandated by the BC’s Homeowner’s Protection Act and its Regulations). The new home warranties protect homes from construction defects, such as materials and labour, building envelope, and structural defects, and helps ensure that owners receive the best value from their investment as possible[1]. The following is a breakdown of the coverage of each warranty and the benefits of completing the respective warranty reviews.

15 Month Warranty: The 15 month warranty is probably the most important warranty for a new building/complex as it has the most coverage out of all the new home warranties (i.e., the Strata would likely be able to get the majority of deficiencies addressed under the 15 month warranty and receive the best value for their investment in a warranty review report). The 15 month warranty common property warranty covers all defects in materials and labour, including aesthetic deficiencies (i.e., paint splatters, scratched finishes, etc.), sound transmission issues between suites and between suites and common areas, interior common area deficiencies, etc., and violations in the Building Code[2].

2 Year Warranty: The 2 year warranty has less coverage than the 15 month warranty (i.e., the 2 year warranty only includes coverage for any defects in materials and labour supplied for the exterior cladding, windows, doors, and caulking that may lead to detachment or material damage to the common property, any defects in materials and labour supplied for the electrical, plumbing, heating, ventilation, and air conditioning delivery and distribution systems, and violations in the Building Code); however, it is still very important for the Strata to complete a 2 year warranty review. This is because many deficiencies that may not have been apparent at the 15 month mark may now be apparent (e.g., plumbing/mechanical systems may be pushed harder, and any deficiencies would likely become more apparent, closer to the 2 year mark as more people are moving into the building/complex or issues with caulking or cladding securement may be more apparent at the 2 year mark as it has had more exposure to the elements).

Failed caulking

5 Year Warranty: The 5 year warranty only covers building envelope deficiencies, including a defect which permits unintended water penetration such that it causes, or is likely to cause, material damage to a new home. Although the 5 year warranty coverage is much narrower than the 15 month and 2 year warranties, it is still important for the Strata to complete the 5 year warranty review as any building envelope water ingress issues will likely not be covered by the Strata or the individual suite/unit owner’s insurance as it would be considered seepage (i.e., over a period of time). This is different from a pipe leak/burst for example, which typically would have insurance coverage.

10 Year Warranty: The 10 year warranty covers structural defects. The warranty defines structural defects as defects in the material and labour that results in the failure of a load bearing part of the new home and any defect which causes structural damage that materially and adversely affects the use of the new home for residential occupancy. Structural deficiencies are not common; however, if there are any structural deficiencies, the resulting repairs could be cost prohibitive for a Strata and the conditions may be potentially dangerous for residents/occupants in the meantime (i.e., there may be added liability issues for the Strata). This is why we recommend Stratas complete the 10 year warranty review, even if there are no apparent issues to the Strata. Even if the 10 year warranty review does not reveal any potential structural deficiencies, the Strata can then have the peace of mind knowing that third-party professional has reviewed the property and determined that there were no structural deficiencies.

Active leakage through cracks in foundation wall

As one can see from the above, warranty reviews are very important for Stratas of new buildings/complexes. One final thing to note is that although some Stratas may choose to complete the respective warranty reviews either on their own or with the assistance of their property managers, we still recommend having a professional experienced in warranty reviews (and building systems in general) come and do the review to make sure nothing that could have potentially be warrantable is missed and to minimize the Strata’s risks/liability. Experience comes a long way when it comes to warranty reviews.

This article was prepared by Jason Ching, a Project Manager at Sense Engineering. Sense Engineering is a consulting firm which provides Warranty Review, Capital Planning (including Depreciation Reports), and Restoration Consulting, predominantly to owners and managers of existing strata, multi-res, and commercial properties in the BC Lower Mainland. For more information on how Sense Engineering might be able to help you, visit www.senseengineering.com.

[1] There are exclusions to the warranty coverage. Exclusions typically include landscaping (both soft and hard), site features, surface drainage, roads, curbs, and lanes (though driveways and walkways are not excluded), commercial use areas, etc. For a full list and description of exclusions, please refer to the specific common property warranty certificate.

[2] To have coverage, the Building Code violation must constitute an unreasonable health/safety risk or cause/likely to cause material damage to the new home.

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