Licensed Residential Builders
All new homes in British Columbia must be built by a Licensed Residential Builder. To obtain this license, builders must complete in-depth training and exams. This rule is designed to protect the public by ensuring that new homes will be built to a minimum quality standard. All new builds are required by law to be covered by a 10-year Home Warranty Insurance policy.
New homes must carry a 10-year Home Warranty.
Owner Builders
The one exception to this licensing requirement is the Owner Builder Authorization. This allows a person to manage the construction of their own home, and although it still requires training and exams to obtain, it is less intensive, and cheaper than becoming a Licensed Residential Builder. Owner Builders must manage the project themselves, and are personally liable for any construction defects in the home during the first 10 years after completion, regardless of who owns the property. Owner Builders may obtain a Home Warranty Insurance Policy if they choose, which helps protect them from litigation if they sell the home before the 10 year period ended.
2-5-10 Warranty
The minimum standards of coverage for a Home Warranty are as follows.
2 year labor and materials coverage
5 year building envelope coverage
10 year structural coverage
Home warranties generally exclude things like landscaping, site grading and surface drainage, and non-residential detached structures. The Homeowner Protection Act regulates what Home Warranty Insurance companies are allowed to exclude from their coverage.
Building a New Home?
If you are thinking of building a new home, make sure the contractor you hire is a Licensed Residential Builder. This designation is separate from a Red Seal or other trade-associated ticket or license.
Buying a New Home?
If you are buying a home that is less than 10 years old, you should be eligible for the 2-5-10 Home Warranty Coverage. This policy is transferrable between owners. Make sure you obtain a copy of the policy prior to subject removal so you are able to review the coverage.
A home built with an Owner Builder Authorization may not have a Home Warranty!
A seller is legally required to disclose if a property was constructed with an Owner Builder Authorization.
Older Homes
Any home older than 10 years will no longer have Home Warranty coverage. At this point, any defects are not considered to be the result of negligence on the part of the builder.
Key Points
You must be a Licensed Residential Builder to construct a new home in BC.
All new homes are covered by a 2-5-10 Home Warranty Insurance Policy.
Home Warranty Insurance policies are transferrable if the home is sold.
Owner Builder Authorization allows you to build your own home.
Owner built homes do not need to carry Home Warranty Coverage.