The provincial government has taken the first step in passing legislation aimed at protecting new home buyers in Alberta — a move which could add up to $2,000 to the cost of each new home.
First reading was recently given by the Alberta legislature to the New Home Buyer Protection Act, which would make warranty coverage for new homes mandatory in the province.
“Albertans should be reassured that their single largest purchase will be protected,” says Alberta Municipal Affairs Minister Doug Griffiths, who has called the legislation the strongest of its kind in Canada.
The mandatory warranty would tack an estimated $1,500 to $2,000 on to the cost of each home, says Dave Hooge, president of the Canadian Home Builders’ Association-Alberta, which helped develop the legisation. It would cover single-family homes, condos, recreation properties, modular homes and mobile homes as part of a program that would include a two-year warranty for electrical and plumbing systems.
It would also include five years coverage on water damage and 10 years of protection for major structural components — a framework commonly called a 2-5-10 warranty.
It also includes a minimum of one-year coverage on materials and labour. If approved, the new legislation would start in the fall of 2013. The move to mandatory new home warranty coverage is lauded by the CHBA-Alberta.
“We’re really happy as an association to see that this is what has come to fruition,” says Hooge, who is also president and general manager of Stepper Custom Homes.
The association already required its members to offer a third-party warranty to its customers, but this does not cover non-members.
The mandatory warranty is widely seen by industry members as important protection against fly-by-night builders. “This will be good for both the industry and consumers,” says Hooge.
Charron Ungar, president of CHBA-Calgary, also says he’s pleased with the province’s step toward a mandatory warranty program.
“We support the protection of our homebuyers — and ensuring builders stand behind the products they offer is an extension of the ethics we all live by,” says Ungar in a news release. He is also president of multi-family Calgary builder Avi Urban.
The design of the warranty is largely based on the 2-5-10 warranty model used in B.C., which Bucci Developments has followed for years.
The B.C.-based builder behind Calgary condo developments Tribeca in Mission and Next in Bridgeland is pleased to see a similar policy being proposed for Alberta, says president Mike Bucci. Through its Tribeca complex, the company was the first developer in Calgary to introduce the 2-5-10 warranty program, he says.
“We tried to bring it to the market for years, but couldn’t find an insurance partner that wanted to offer that product” until recently, says Bucci.
Making such a policy mandatory across Alberta “levels the playing field between developers and forces them to make decisions that reflect the requirements,” he says.
If approved, many condo developers will turn to methods such as rain screens and longer-lasting materials, says Bucci. The screens add an air space behind a building’s exterior, allowing it to drain and vent — protecting against mould and rot.
However, builders are voicing concerns over an exemption within the proposed legislation that would waive the mandatory warranty on owner-built homes.
Ungar calls the loophole worrisome. “Ideally, all homes would be under warranty to ensure the protection of not just the initial owner, but future owners as well,” he says.
The CHBA-Calgary fears the exemption would allow Alberta residents to build their own home and flip it one year later without any protection for the buyer. But going forward, CHBA-Alberta will work with the province on the legislation’s framework, including the provision on owner-built homes.
“We hope to develop regulations that are tightly defined and controlled,” says Hooge.
VOICE FOR BUILDERS
The Canadian Home Builders’ Association-Alberta serves as a voice for the residential construction industry in the province.
It has more than 1,500 business members, which include homebuilders, developers, renovators and trade and supply companies. These members belong to regional chapters within CHBA-Alberta including Medicine Hat, Lethbridge, Grande Prairie, Edmonton, Central Alberta and Calgary. The president of CHBA-Alberta is Dave Hooge, who is also president and general manager of Calgary-based Stepper Custom Homes.