NEW HOME WARRANTIES EXPLAINED

As stated on alberta.ca, a new home warranty is attached to the home, not the owner of the home, and remains in effect upon the re-sale of the home until the coverage expires. The warranty coverage begins when the first of the following occurs:

• the new home is occupied
• the permitting authority grants permission to occupy
• the title of the new home is transferred to the owner

New Home Warranty is not a recommendation or "good practice", it's a law requirement that all builders must follow and provide. As stated in the New Home Buyer Protection Act, the following points are the minimum required warranty coverage on all new homes constructed in Alberta.

- One year for labour and materials
Covers any defects in materials and labour related to how the home was constructed and materials used. This may include things such as flooring, staircases, baseboards, cabinets, railings and other trim and fixtures.

- Two years for delivery and distribution systems
Covers defects related to the electrical, plumbing, heating, ventilation and air conditioning delivery systems.

- Five years for building envelope protection
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 act requires a minimum 5 years of coverage, with the requirement that warranty providers offer builders the option of purchasing an additional 2 years of building envelope coverage.

- 10 years for major structural components
Major structural consists of the frame, including the roof’s structural integrity, and the foundation.

Despite what many buyers (and uninformed Realtors!) believe, a new home warranty is not a catch-all for deficiencies and it is NOT a safety net for a builder who doesn't follow through on their promises. A new home warranty will cover unknown defects in materials and workmanship discovered AFTER CLOSING. It will NOT typically cover contractual items (like your builder promising to add AC), or deficiencies caught before closing. A new home warranty company is not meant to enforce the contract you wrote with your builder (that is what a lawyer is for), but rather protect you from issues that come after closing (like a faulty hot water tank). 

The new home warranty market has become more competitive in the past few years with more providers coming on the scene. Be aware that while all providers offer the minimum coverage required by law, they all have different policies beyond that with different interpretations of deficiencies and what they will and will not cover. Just because you've read one policy does not mean the next one is identical.

The current (as of April 2024) new home warranty providers in Alberta are (in alphabetical order):

• Alberta New Home Warranty Program
• Blanket Home Warranty Ltd.
• Millennium Insurance Corporation
• National Home Warranty Group Inc.
• Progressive Home Warranty Ltd.
• Travelers Insurance Company of Canada
• WBI Home Warranty Ltd.

As a new homebuyer who (hopefully) loves their brand new home, you might expect every little deficiency to be covered, but that's not always the case. There are very specific parameters for every category, such as paint, concrete, flooring, etc. For example, certain major paint deficiencies may be covered, but after you take possession of the home, most chips and scratches are not. Or when it comes to cracks in the concrete, it may have to be a certain width and length for it to qualify as deficient. Also, your new home warranty mostly likely only covers the primary residence. This means it might not cover your detached garage because it's not connected to the house itself. These are the kind of items you want to look for in the exclusions section of the contract before signing so you're not caught off guard. 

Regardless if you're working directly with a builder or with a real estate agent, always obtain a copy of the new home warranty and thoroughly review it. You can even make this a condition of your purchase. 

While the introduction of mandatory warranties on new homes is a great step in the right direction, it is important to note that a new home warranty is NOT a safety net. Know your rights. Read the paperwork. Oh, and having a good Realtor doesn't hurt! *wink wink*

We're new infill experts with decades of experience here in Calgary. It's our goal to make your new infill buying experience easy, stress-free, and, dare we say, enjoyable! Contact us, and we'll make it happen!