What to Know About Home Warranties

Buying a home comes with a lot of choices; which type of home works best, which neighbourhood offers the most benefits? Homeowners also have to choose whether they may want to protect themselves when purchasing a new home. This form of protection comes in the shape of home warranties. These warranties generally covers the structural integrity of the home and is a different type of protection than what is offered through a home insurance policy.

Overview of Home Warranties

Home warranty requirements vary by province. Home warranty programs include mono-provincial warranty programs, single New Home Warranty Programs and third-party warranties. Builders must be a part of a Warranty Program to receive mortgage insurance on loans considered to be high-ratio. Canada Guaranty, Genworth Canada and Canada Mortgage and Housing Corporation (CMHC) require this from new home builders.

Do Homeowners Pay for Home Warranties?

Unlike home insurance, the cost of home warranties are not generally rolled into mortgage payments. However, homeowners do absorb the cost of a home warranty, even though they do not make regular payment. The final closing costs due by the homebuyer often include the cost of warranty insurance.

How Do Home Warranties Protect Homeowners?

Homeowners are protected from a number of possible construction defects for a set period of time. In British Columbia, specified labour and materials are covered for two years, the building envelope is covered for five years and the structure would be insured for ten years. Stipulations and timelines vary as does the type of coverage offered on different types of homes.

Single-family homes, row homes or semi-detached homes may be covered by home warranties offered in a province. Coverage offered may be the purchase price of a home or up to $200,000 when it comes to new single-family homes in British Columbia. Other types of homes require different levels of coverage.

Can Home Warranties Be Offered on a Pre-Owned Home?

In some cases, there are home warranty programs offered on resale homes. New buyers may spend money on the available program or a seller may purchase a home warranty. If a property is sold by original owners and is still under warranty, a new owner will be able to assume the warranty for any remaining term. Other types of home warranties for West Valley resale homes include the Certified Resale Home Warranty and the Certified Pre-Owned Home Warranty.

Where to Get a Home Warranty?

Homebuyers may get their home warranty through members of a warranty program. First National is one of the mortgage lenders that also offers home warranties. It may also be possible to get a home warranty through a local credit union.

Are There Exemptions to Home Warranties?

Every province may have different regulations as they apply to home warranties. British Columbia is one province where exemptions do exist on home warranty requirements. Exemptions in British Columbia include owner builder exemptions, where the builder is responsible for any defects for a period of 10 years after occupancy, and some types of homes including:

• Floating homes;
• Care facilities;
• Dormitories;
• Hotels and motels; and
• Manufactured homes.

Other factors, such as being strata-titled, may require that new construction come with home warranty insurance.

Home Warranties in Canada

Potential homebuyers should realize that a home inspection is useful but may not be as thorough as necessary to detect construction defects. Buyers who want to purchase or invest in a new or resale home will benefit from added assurance of structural integrity and quality construction provided by a home warranty.