Monday, October 29, 2012

Government of Alberta introduces Bill for mandatory warranty protection for new home buyers

The Conservative Government of the Province of Alberta has introduced a new bill to strengthen the insurance required by builders of new houses and condominiums in Alberta.  The Communications department of Alberta Municipal Affairs made the following news release:

"News Release - October 25, 2012
Government introduces mandatory warranty protection for new home buyers

All Albertans who buy a new home will have warranty coverage for their purchase under new legislation proposed by the Alberta government.

Bill 5, the New Home Buyer Protection Act, introduced in the legislature today, requires builders to provide home warranty coverage for all new homes built in the province starting in fall 2013.
“While most homes in Alberta are built to stand the test of time, if things do go wrong, homeowners will have stronger protection to get their homes repaired,” said Minister of Municipal Affairs, Doug Griffiths. "Albertans should be reassured that the single largest purchase their family makes will be protected by one of the strongest warranty programs in the country."
Under the proposed legislation, all new homes (detached homes and condominiums) would at minimum, include a warranty for:
  • one year labour and materials;
  • two years for defects in labour and materials related to delivery and distribution systems;
  • five years building envelope protection, with a requirement for the warranty provider to offer the consumer the option to purchase additional years of coverage; and,
  • 10 years coverage for major structural components.
It is expected that the new home warranty would cost about $1,700 to $2,000 for an average home, or less than one per cent of the cost of the average house.
Owner-builders will be exempt from the requirement to carry a new home warranty unless the property is sold within the warranty period. If the home is sold within the warranty period, the owner-builder must provide the buyer with warranty coverage for the remaining portion of the warranty period.
Insurance companies and their agents (including home warranty providers), are governed by the Insurance Act. A new dispute resolution process came into effect on July 1, 2012, under the Act that provides consumers with greater clarity and information about the process and their rights when submitting a claim for a home warranty insurance contract.
The program balances affordable consumer protection and builder accountability."

The Government has also posted information on their website.  This is a step forward in motivating builders to built a good product.  It will be interesting to see if the Bill is passed into law and also if changes to the Condominium Property Act (Alberta) will be forthcoming.