Understanding Your New Home Warranty Program

Now that we have settled into our new house, you would think that the home building process would be complete.  After all, it’s been over a month since we took possession of the house, and any defects have been repaired and missing items have been replaced.  Time to relax and enjoy our new home, right?

Not so fast.  You need to understand your new home warranty program and how you’re protected in case any structural defects arise once you’ve taken possession of your home.

Here in Alberta, new homes are protected by the Alberta New Home Warranty Program which offers deposit protection, builder performance protection, structural integrity and first year warranty protection to home buyers as well as mediation, conciliation and arbitration procedures.

What Does Your New Home Warranty Include?

According to our Alberta New Home Warranty Program guide, we have the following enhanced coverage for our single family home:

  • Deposit Protection – The return of your deposit(s) up to 20% of the purchase price to a maximum of $100,000 is covered in the event of default by a Builder Member of the Program.
  • Builder Performance Protection – You’re covered for up to $50,000 (including up to $3,000 in legal fees) towards the completion costs or the discharge of builders’ liens in the unlikely event a Builder Member should fail to complete a home as contracted.  The Program provides the administration, co-ordination and supervision of all issues for the completion of your home.
  • First Year Workmanship and Materials Protection – If a Builder Member does not meet its warranty obligations, the Program provides for up to $100,000 in costs to repair defects in workmanship and materials during the first year after you take possession.  This $100,000 total also includes costs related to the Five Year Structural Integrity Warranty Protection.
  • 5 Year Structural Integrity Protection – The unused portion of the First Year Materials & Workmanship Warranty coverage amount, up to $100,000, can also be applied to the costs to repair major structural defects affecting the load bearing components of your home in the first five years.
  • 10 Year Structural Integrity Protection (Optional) – At the time of possession, you have the option to purchase extended Structural Integrity Warranty Protection (at a cost of $200 + GST) for an additional five years for a total of ten years of structural protection.
  • Additional Living Expenses Protection – While Warranty work is being completed in your home, you may incur incremental excess living costs.  The Program will reimburse you for up to $6,000 in pre-approved, verifiable living expenses over the span of your coverage.

Understanding Your New Home Warranty Program

During the first year that we are living in our home we are covered by the Builder Warranty.  The builder ensures that the home was built to the construction standards of the Building Code, and agrees to repair or replace any structural defects upon receiving written notice from the homeowner.

The next four years are covered by the Alberta New Home Warranty Program for any structural defects.  For an additional $210 we can extend the new home warranty program from five years to ten years.

As homeowners we have the responsibility to provide written notice to the builder within one year of the possession date, and written notice to the Warrany Program within five years of the possession date giving full details of any defect.

Homeowners must also ensure that they properly maintain their home, as any defect arising from improper maintenance will not be covered by the new home warranty program.  One of the most common defects in new homes is water damage caused by the failure to maintain proper grading of the ground when the homeowner begins landscaping.

The Alberta New Home Warranty Program is a great resource for home buyers and offers protection throughout the entire building process.  We are very happy with our builder and hope that we never have to use the warranty program, but we are grateful that it’s there to protect us.  And this is one time when buying the extended warranty might actually make sense.

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  1. youngandthrifty on September 14, 2011 at 1:07 am

    How is the new home now that you’ve settled in ? 🙂

    • Echo on September 14, 2011 at 10:08 pm

      The new house is great! We couldn’t be happier with how it turned out.

  2. SavingMentor on September 14, 2011 at 5:59 am

    That’s interesting. I always kind of wondered how these new home warranties and insurances worked. I’ve never owned a new home so I’ve never read the paperwork.

    I wonder if things are the same or at least similar throughout the rest of Canada?

    • Echo on September 14, 2011 at 10:14 pm

      The last house we lived in was new too, but it was a spec home and we didn’t put any customization into it. Fortunately we didn’t have to make a warranty claim, but it’s nice to know that we have protection.

      This time it’s a much larger investment and I want to know everything about our new home warranty in case anything happens.

      I would think that most provinces would have some kind of new home warranty program in place.

  3. My Own Advisor on September 15, 2011 at 10:36 am

    What can I say? Excellent post. Will tweet 🙂

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