2-5-10 New Home Warranty Reporting: Ten Frequently Asked Questions

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2-5-10 New Home Warranty Reporting:
Ten Frequently Asked Questions

Naomi Rozenberg, Associate
Phone:  604-685-3911
Email:  nrr@lmlaw.ca

 

 

If your home was built in British Columbia in the last 10 years, chances are you still have mandatory warranty coverage for certain construction defects.

The “2-5-10” new home warranty regime was created in response to the leaky condo crisis. However, the benefits of a 2-5-10 warranty are not automatic; homeowners must take steps to enforce their warranty.

How does a Strata Corporation effectively exercise its warranty rights and avoid a loss of coverage? These ten frequently asked questions will help your Strata navigate the complex world of 2-5-10 warranty reporting.

Q1:      What items are covered by the warranty?

A1:      Broadly speaking, the 2-5-10 warranty provides coverage for:

  1.   defects in materials and labor and violations of the building code for one year (strata lots) and 15 months (common property);
  2.   for two years:
    • (i)    defects in the electrical, plumbing and HVAC delivery and distribution systems,
    • (ii)  defects in the exterior cladding, caulking, windows, and doors that may lead to detachment or material damage,
    • (iii) defects which render the home unfit to live in, and
    • (iv)  violations of the building code;
  3.   defects in the building envelope for five years; and
  4.   structural defects for ten years.

The Homeowner Protection Act (“HPA”), the HPA Regulation and the warranty policy contain important definitions, clarify the extent of coverage, and identify permitted exclusions.

Whether a deficiency is a warrantable “defect” is a complicated question that involves a combination of facts and law. If there may be warranty coverage, the safest course of action is to submit a warranty claim and consult a construction lawyer.

Q2:      What steps can the Strata take to avoid missing a reporting deadline?

A2:      The property manager and council members should create calendar reminders for all reporting deadlines, to reduce the risk that a deadline will be missed. The warranty commencement date and reporting deadlines are located on the warranty certificate. Confirm you have all common property warranty certificates for the condominium, particularly if the development has more than one building.

Q3:      How can the Strata identify defects?

A3:      The Strata should budget for an “end of warranty” inspection and report by an engineering consultant. The first inspection should occur several weeks before the 15-month common property warranty expires, to give the consultant enough time to prepare a report. Regular inspections by construction professionals will reduce the risk that defects are not detected and reported in time. The timeline to prepare a warranty report varies. Do not wait until the warranty is about to expire to contact a professional.

 Q4:      When should the Strata make a warranty claim?

A4:      A defect must be reported within a reasonable time after it is discovered and before the expiry of the applicable warranty coverage.

Q5:      What information should be included in the warranty claim?

A5:      The written notice must provide particulars of any specific defects covered by the warranty. The claim should include a cover letter that sets out:

  1. the strata plan number and civic address of the condominium,
  2. the warranty certificate number(s), and
  3. a description in reasonable detail of any known or suspected defects and damage.

The letter should enclose:

  1. a copy of the warranty certificate(s),
  2. a copy of any consultant’s reports,
  3. all prior correspondence with the warranty provider or builder related to the defects, and
  4. any other documentation that provides details of the defects or damage.

Q6:      To whom should the warranty claim be given?

A6:      The claim must be delivered to both the builder and warranty provider identified on the warranty certificate. BC Housing maintains an online registry of residential builders. The address of the warranty provider or builder may also be obtained by conducting a corporate registry search through an agent such as Dye & Durham. If there is more than one possible address for delivery, err on the side of caution and deliver the claim to all known addresses.

 Q7:      How should the warranty claim be delivered?

A7:      Because the claim is so important, the strata may need to be able to prove its timely receipt. Section 31.1 of the HPA explains how a notice or other document may be given or served. A process server who delivers the claim can confirm the date and time of delivery. Ordinary and registered mail delivery is technically acceptable but not recommended.

 Q8:      What happens after the claim is submitted?

A8:      The warranty provider might ask the builder to investigate, or it may send a claims representative to evaluate the claim. Cooperate with the warranty provider and builder by providing information and reasonable access to inspect or repair the defects.

 Q9:  Do the Strata have any recourse if the claim is denied?

A9:      If the claim is rejected or ignored, the Strata can request mediation pursuant to the HPA Regulation. It can also sue the warranty provider, provided it does so within the two year limitation period (deadline to sue). In addition, the Strata may have other valid claims such as negligence and breach of contract against the builder, consultants, and others.

Q10:   What steps should be taken if a warranty deadline may have been missed?

A10:    Seek legal advice promptly, because all may not be lost. Some warranty certificates do not set out the correct commencement and expiry dates. In other cases, the warranty provider and builder may have been provided with effective notice of the defect in earlier correspondence. Courts may also offer “relief from forfeiture” if it would be inequitable to deny coverage because of imperfect compliance with warranty terms.

Warranty reporting is complex and time-sensitive. Failure to comply with the Strata’s reporting obligations may result in the claim being denied or limited. The success of each warranty claim will depend on its particular circumstances. Compliance with the guidance in this article is therefore not a substitute for legal advice and does not guarantee that a particular warranty claim will be accepted.

Lesperance Mendes regularly assists strata corporations to enforce their 2-5-10 warranties. To schedule an appointment, John G. Mendes or Naomi R. Rozenberg.

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied on upon without independent legal advice.

Lesperance Mendes Lawyers
900 Howe St #550, Vancouver, BC V6Z 2M4
(604) 685-3567