By Bjorn Delblanc
This “Warranty” Protects Homebuilders – Not Home Buyers
A new home warranty should be a simple thing – if you buy a new home and something breaks, it gets fixed for free. Easy, right?
Unfortunately, the Alberta new home warranty isn’t so straightforward.
That’s because Alberta’s warranty program isn’t really a warranty at all. It’s more like an insurance policy that the government forces every builder to purchase. And home buyers are stuck with whatever coverage the insurer agrees to.
What Does Alberta’s New Home Warranty Even Cover?
There are four important numbers that describe what’s covered under Alberta’s new home warranty rules – 1, 2, 5, and 10.
1 year of coverage for defects in materials or workmanship.
2 years for “delivery systems” in the home. This covers things like plumbing, electrical, and heating systems. Think of the plumbing “delivering” water from the City to your sink, for example.
5 years for the building envelope. This refers to the components that separate the inside climate of your home from the outside. Things like siding, house wrap, roofing, windows, etc.
10 years coverage for major structural items. Framing, beams, foundations, and so on.
Take a hard look at these numbers, and think about what a home buyer is really getting with this warranty.
If an electrical system starts shorting out in year 3? Or if the windows start leaking after 6 years? You’d be outside of the warranty period, and most likely out of luck with the warranty provider.
You get better warranty coverage on a midsize sedan from Mitsubishi.
Our Experiences With Alberta New Home Warranty
You might be asking: “I thought Blue Jay only worked on siding renovations – what do you know about Alberta New Home Warranty?”
Both Paul and I got our start in the construction industry as local reps for James Hardie Building Products, North America’s leading manufacturer of fiber cement siding. I myself was the technical specialist for Hardie covering all of Alberta.
On multiple occasions, representatives for various new home warranty insurers in Alberta requested that I visit a house that was in a dispute. Each of these cases was a Hardie siding install bad enough that the homeowner would go through the hassle of filing a warranty claim.
One case was pretty straightforward – the homeowner’s concerns weren’t actually major issues, and after a conversation with them they felt a lot better.
But in most cases, the siding was installed quite poorly. The installations were technically correct (or mostly correct) according to the building code, but the aesthetics of the exterior were terrible. Poor touch up, boards covered in cut dust, loose boards, you name it. Pretty much everything on our list of top 10 Hardie install errors.
Alberta New Home Warranty didn’t do anything for these homeowners. Because they determined that the siding wasn’t actually “failing” yet, there was no coverage.
It wasn’t right, but the homeowners had no other recourse.
Who Pays The Warranty Provider?
Here’s another issue that most home buyers don’t know about. Builders purchase their insurance from the provider of their choice. The builder is the customer in this situation. Not the homeowner.
So who will the warranty representative naturally want to protect in the event of a claim?
New Home Warranty Problems Can Take Years To Show Up
Here’s the thing about problems in home construction – they often aren’t noticed until years down the line.
Take the Castledowns Pointe condo building, for example. It was a 4-story wood framed building in north Edmonton, built in 1999. In 2023, an investigation into a fire discovered that the framing of the building was done so poorly that the whole thing was at risk of collapsing. It hadn’t happened yet, thankfully, but it was only a matter of time. The building was condemned, and the owners were forced to move out.
The same thing applies to the building envelope. Even if your builder’s contractor does the Tyvek upside-down and backwards, the leaks aren’t likely to cause major damage until after the 5-year new home warranty coverage has run out. It could be leaking from day one, but you’d never know unless you tore the siding off the wall to check.
Good Homebuilder? Bad Homebuilder? Same Awful Warranty.
The average price of a new home in Alberta in 2024 is over $500,000. Half a million dollars. And if you end up buying from a low-quality homebuilder, major warranty problems could cost you hundreds of thousands more to fix.
And because the Alberta government mandates that builders must participate in the new home warranty program, every home builder in the province offers the same warranty: 1, 2, 5, and 10. Established builders with a reputation for quality have the exact same warranty as a builder who cuts every corner to make a buck.
Alberta New Home Warranty Case Study
Obviously, we’ve been thinking about the problems with Alberta’s new home warranty program for some time. And luckily, since we only work on siding renovations, our customers don’t have to deal with these issues. (I live in a 1961 bungalow in west Edmonton. I don’t know who the builder was, but they did a fine job.)
But I decided to write this article today because of a news story on CBC about a home buyer that’s having to sue her builder.
According to the CBC, here’s what happened:
The house was built in 2015. The owner filed a claim with the new home warranty provider in 2022, as her porch and balcony were both pulling away from the main structure of the home. From my perspective, this should be considered a major structural component of the home failing within the 10-year warranty period.
Two different engineers filed reports suggesting that structural components of the build could be to blame. And despite the fact that the porch and balcony are clearly FALLING DOWN, the new home warranty provider informed the owner that this would not be covered.
This photo from the CBC news article clearly shows major structural issues with the front porch of this 2015 built home.
So she was forced to pay $77,000 out of pocket to hire a contractor to fix the issue. During the demolition, she very smartly hired a 3rd engineer to review the work. According to the report, the screw piles that should have been supporting the whole porch and patio assembly were not installed properly.
It looks like this should have been covered by new home warranty all along.
Clearly, I’m just an observer in this situation. And of course there are two sides to every story. I don’t know the builder, and I don’t know the homeowner.
But when I read this news story, it brought back so many annoying memories that I wanted to do what little I can to make people aware that problems exist.
I’m hopeful that the government will make changes to the new home warranty program, because the way it’s built right now, it doesn’t protect the best interests of home buyers.
In the meantime, I’ll be staying in my old bungalow rather than buying something new.
If you’re staying in your older home, give us a call. We’ll be happy to help you make it look like new again. And you won’t have to deal with a new home warranty company.