Mandatory Warranty - Will it Better Protect Albertans?

Long-awaited protection for buyers of new homes is finally coming to Alberta, says the Minister of Municipal Affairs Hector Goudreau, he is looking at making new-home warranties mandatory in Alberta.

Great news....or is it? Will it make the residential industry better, or add protection to the homeowner as Mr. Goudreau claims? Not a chance. So then why would the government introduce legislation that will make home warranty mandatory in Alberta, there has to be a bigger picture here somewhere. How does mandatory warranty better protect the consumer when 95% of the Builders provide warranty already? Most homeowners cannot buy a home through their lending institutions unless the home is protected by warranty so the Builders voluntarily enrol with a warranty provider. So who benefits from mandatory warranty, it doesn’t help the Builders, it doesn’t help the homeowners so who will it protect? The only logical answer is the government itself. In 2008 a report was created called the Building Envelope Survey, a report that the government shelved. This report outlined major issues in the building industry, more specifically how our poor building practices in Alberta help contribute to the building envelope issues.

According to the Province of Alberta’s Fair Trading Act the Builder of a residential home is protected under the act if they are enrolled with a warranty provider, you legally cannot file a complaint against that Builder. Suing a Builder is almost out of the question and Builders know this, the President of a home builder I formerly worked for could often be heard saying “let them try and sue me, we’ll see who has deeper pockets”. That’s their attitude - let them try. It’s inconceivable that someone would take on the government over issues with their home but to ensure no one will the government will introduce legislation making warranty mandatory and according to the Fair Trading Act who will be held responsible.....the warranty provider.

Making warranty mandatory keeps the best interest of the Government of Alberta in mind and no one else. The government knew about issues with the building envelope of a new home back in 2002, nine years later there has still been no changes to the Alberta Building Code to address these issues. Making warranty mandatory will magically take care of these issues, please, there has been warranty in this province since 1974 and there are still major issues in this industry. So all of us Albertans who have been patiently waiting for protection our long-awaited answer is finally here, thanks Hector.

Don't Use a Builders Lawyer.

Most Builders will offer their lawyers services and cover the legal fees for you, so why would I possibly not want a homeowner to take advantage of that and save the money? Warranty Smarts is about keeping the best interests of the homeowner a priority so even though you will save that money - the lawyer works for the Builder and the Builders interests will always be at the forefront. I’m going to reveal an industry secret because I know many are wondering why the Builder would offer that service, it’s very simple, it’s to ensure they get payment for the home at the time of the possession walk-through.

Something that every potential homebuyer needs to understand is that they need to protect themselves, it doesn’t matter who the Builder is in this industry. The best or the worst Builder will take every precaution to ensure their interests are always protected. A Builder has carried most of the cost of your new home through-out the build so when the possession walk-through occurs and if things go bad how is one way to guarantee that they will receive their money? By having the homeowners use the Builders lawyer that’s how. The morning of the possession walk-through the Builder sends a letter called a “Substantial Completion” document to their lawyer, this document is telling the lawyer that the home is completed to an acceptable level and it is okay to release the funds. Their lawyer is not going to question this and they release the funds to the Builder. By the time you start the possession walk-through your funds have already been transferred. This is one way of many that a Builder uses to protect themselves from a homeowner.

If you find yourself in a similar position where on the possession walk-through your new home is a disaster and you used their lawyer meaning the funds have already been transferred leaving you no leverage, and yes this happens in the industry, there is only one thing you can do at this point and that’s to sign the Certificate of Possession to start your warranty. Many people do not understand that the warranty on your home does not start until the Certificate of Possession is signed after the possession walk-through. Once the Certificate of Possession is signed by you and the Builders representative your warranty becomes legal, you can now file for Conciliation with the warranty provider.

Using a lawyer that you have hired that is independent of the Builder ensures that you will have that leverage available to you on possession day if things do go sideways. To me this is the best tip I can give a potential new homebuyer, because it’s not just about the possession day. There are many times when the relationship falls apart after possession and you will require the advice of your lawyer, but if you used the Builders lawyer when you call for advice they will tell you they are under retainer to the Builder. So any time that you have put into building the client – lawyer relationship was a waste of your time.

Remember these words, Protect Yourself.