Articles

Details on the 2-5-10 Warranty on New Homes

2-5-10 Warranty Coverage in Vancouver

As a Vancouver Realtor with experience in presale condos and homes I get the question about “what is the 2-5-10 warranty”. Although we can always give general knowledge on it it is important to know exactly what it entails.

One of the larger insurance providers is Travelers Insurance Company of Canada. Here are some details on their structure when it comes to Vancouver presale condos and homes.

Here is what a typical structure would look like:

Materials and Labour Warranty:

(a) In the first 12 months of the warranty you receive coverage for any defect in Materials and Labour
(b) In the first 15 months of the Warranty, for the common property, common facilities and other assets of a Strata Corporation, coverage for any defect in  Materials and Labour.
(c) In the first 24 months of the warranty;
– Coverage for any Defect in Materials and Labour supplied for the gas, electrical, plumbing, heating, ventilation, and air conditioning Delivery and Distribution Systems
– Coverage for any defect in Materials and Labour supplied for the exterior cladding, caulking, windows, and doors that may lead to detachment or material damage to the new home or common property
– Coverage for any Defect in Materials and Labour which renders the new home unfit to live in, and/or
– Non-compliance with, or a violation of the Building Code if the non-compliance or violation constitutes an unreasonable health or safety risk or has resulted in, or is likely to result in Material Damage to the new home.

Building Envelope Warranty – 5 Years 

Coverage for the building envelope for up to 5 years for Defects in the Building Envelope of a new home, including defects which permits unintended water penetration such that it causes or is likely to cause Material Damage to the new home.

Structural Defects Warranty – 10 Years

Coverage for Structural Defects for up to 10 years is for:

(a) Any defect in Materials and Labour that results in the failure of Load Bearing part of the new home
(b) Any defect which causes structural damage that materially and adversely affects the use of the new home for residential occupancy

 

Now we all know that insurance is not designed to actually protect us as new home owners… There are many, many exclusions and here are a healthy number of them:

  • weathering, normal wear and tear, deterioration or defelection consistent with normal industry standards
  • normal shrinkage of materials caused by drying afetr construction
  • any loss or damage which areises while the new home is being used primarily or susstancially for non-residential purposes
  • materials, labour, or design supplied by an owner
  • any damage to the extent that it is caused or made worse by an owner or Thurd Party including:
    • negligent or improper maintenance or improper operation by anyone other than the builder or its employees, agents or sub-contractors
    • failure of anyone, other than the builder or its employees, agents or sub-ocntractors to comply with the warranty requirements of the manufactureres of applainces, equipment or fixtures
    • alterations to the new home, including the conversion of non living space into living space or the conversaion of the new home into 2 or more units, by anyone other than the builder, exployees, agents or sub-contractors
    • changes to the grading of the ground by anyone other than the builder, exployees, agents or sub-contractors
  • failure of an owner to take timely action to prevent or minimize loss or damage, including the failure to give prompt notice to the warranty provider of a defect or discovered loss or a potential defect or loss
  • any damage caused by insects or rodents and other animals, unless the damage results from non-compliance with the building code by the builder or its employees, agents or sub-contractors
  • accidental loss or damage from acts of nature including, but not limited to, fire, explosion, smoke, water escape, glass breakage, windstorm, hail, lightning, falling trees, aircraft vehicles, flood, earthquake, avalanche, landslide, and changes in the level in the underground water table which are not reasonably foreseeable by the builder
  • bodily injury or damage to personal property or real property which is not part of the new home
  • any defect in, or caused by, materials or work supplied by anyone other than the the builder, employees, agents or sub-contractors
  • changes, alterations, or additions made to the new home by anyone after initial occupancy, except those performed by the builder, employees, agents or sub-contractors under the construction contract or sales agreement, or as required by the warranty provider
  • contaminated soil
  • subsidence of the land around the new home or along utility lines, other than subsidence beneath footings of the new home or under driveway and walkways
  • diminution in the value of the new home
  • landscaping, both hard and soft, including plants, fencing, detached patios, gazebos and similar structures
  • non-residential detached structures including sheds, garages, carports or outbuildings, or any structure or construction not attached to or forming an integral part of a multi-unit building or the new home
  • any commercial use area and any construction associated with a commercial use area
  • roads, curbs ad lanes
  • site grading and surface drainage, except as required by the Building Code
  • the operation of municipal services including sanitary and storm sewer
  • septic tanks or septic fields
  • the quality or quantity of water
  • a water well
  • damage caused by or made worse by the failure of an owner to take reasonable steps to mitigate any damage

That is quite the list! Now, you probable noticed that an owner must take reasonable steps to mitigate or you could lose your right to the warranty. This is important to note that an owner’s duty to mitigate survives even if;

  • the new home is unoccupied
  • the new home is occupied by someone else other than the owner
  • water penetration does not appear to be causing damage
  • theowner advises the strata corporation about the defect

In summary, as an owner you must act quickly and try to mitigate any issues that arise. As we all know, insurance companies will fight any and all claims as that is money lost when they have to take care of it. Make sure you take care of your home or make sure the people in your home keep you up to date if anything arises.

Leo Wilk – Vancouver Realtor 

No comments yet