Ensuring Buyers of Homes Built After February 2014 are Protected
| August 31, 2023
By Kristian Tzenov, RECA Stakeholder Engagement Manager
Alberta’s New Home Buyer Protection Act (the Act) was introduced to protect the interests of new home buyers and ensure the quality and reliability of newly constructed homes. Under this provincial legislation, all new homes with building permits issued after February 1, 2014, are required to have home warranty coverage.
Alberta real estate licensees are encouraged to check the status of home warranty coverage after February 2014 or beyond through the Property Registry.
The New Home Buyer Protection Act
The Act provides homebuyers with added peace of mind and financial protection against defects and deficiencies in homes constructed on or after February 1, 2014. The Alberta New Home Warranty covers various aspects of the property, including structural defects, defects in materials and workmanship, and major systems such as plumbing, electrical, and heating, for a specified period after the completion of construction. A New Home Warranty is attached to the home, not the owner of the home, so it remains in effect with any re-sales until the coverage has expired.
Role of RECA Licensees
As intermediaries between buyers and sellers, you play a pivotal role in ensuring compliance with the Act. If you are working with a client to purchase a new home from a builder, you must educate them about the importance of home warranty coverage and verify that any new homes listed for sale meet the statutory requirements. In turn, if you are working with clients to purchase a re-sale where the building permits were issued on or after February 1, 2014, it is essential that you confirm that the property has adequate new home insurance. If a licensee places a property for sale that was built on or after February 1, 2014, that does not have home warranty coverage, the Residential Protection Program can issue a Compliance Order requiring the licensee to remove the listing from the internet, remove any “For Sale” signs from the property, and cease any sales activity. Non-compliance with such an order would be an offence under the Act and may result in prosecution or administrative penalties or both from the provincial government.
The Property Registry – Real-Time Verification
The Property Registry offers a real-time database that allows you to check the status of home warranty coverage for any home. By accessing this system, you can confirm whether the building permits for a particular property were issued on or after February 1, 2014, and if the property is covered under a home warranty.
Benefits of Home Warranty
Home warranty coverage offers several benefits to both home buyers and builders. For buyers, it provides financial protection against unforeseen issues that may arise shortly after taking possession of the property. In case of defects or problems covered by the warranty, homeowners can have them addressed without incurring significant out-of-pocket expenses.
For builders and re-sellers, providing home warranty coverage instills confidence in potential buyers. It encourages builders to maintain high construction standards and ensures that their workmanship meets industry regulations and guidelines.
Licensees play a critical role in upholding this legislation. Be sure that you educate your clients about the importance of home warranty coverage and utilizing The Property Registry for real-time verification.
When assisting buyers or sellers with the purchase or sale of homes that should be under the Alberta New Home Warranty, ensure you are aware of the provisions of the New Home Buyers Protection Act.