Selling an Owner Built Home – The Need for a Disclosure Notice
Owner builders have many strict requirements attached to the documentation they receive from the HPO allowing them to build a new home in the province of B.C.
Although an authorization issued to an owner builder exempts that person from the mandatory home warranty insurance and licensing requirements found in the Homeowner Protection Act (Act) and regulations, there are numerous obligations that must be met prior to an authorization being issued to an owner builder, and numerous other obligations that are ongoing. These ongoing obligations of the owner builder last up to 10 years after the new home has been occupied.
An owner builder who built their new home after November 19, 2007, and was issued an Owner Builder Authorization (OBA), has many ongoing obligations. These include having to occupy their new home themselves for at least one year after obtaining an occupancy permit (or one year after actual occupancy if there is no occupancy permit issued) and not being permitted to sell or rent the new home during that one-year period. An owner builder is also required to provide all prospective purchasers with a disclosure notice acceptable to the Registrar of the HPO if they wish to offer for sale and/or sell their new home within the 10 years of their occupancy of the home. This disclosure notice is known as an Owner Builder Disclosure Notice (OBDN).
An owner builder can obtain an OBDN from the HPO. This can be done easily and quickly through the use of an owner builder’s online account with the HPO. In order to be issued an OBDN the owner builder must advise the HPO of the occupancy date of the new home and details on the tradespersons involved in its construction. The HPO will not release the OBDN until the requirement of one-year occupancy after the home has been built has been verified. Subsequent purchasers of an owner-built home are also required to provide the OBDN to future prospective purchasers if they sell or offer the home for sale within the 10-year period after the home was occupied.
The OBDN will state that the home was built under an OBA, when the 10-year period started, and whether or not there is a voluntary policy of home warranty insurance in place for the home. The OBDN will also outline the terms of the statutory warranty which the owner builder provides to all owners of the home within the 10-year period.
The term “prospective purchasers” refers to all persons expressing a serious interest in purchasing the home. At the very least an owner builder must provide the OBDN to a prospective purchaser, prior to that person signing an Agreement of Purchase and Sale for the new home in question. Failure to provide an OBDN to prospective purchasers is an offence under the Homeowner Protection Act and may be subject to monetary penalties and/or prosecution.
For an owner builder who built their new home prior to November 19, 2007 (when the requirements for owner builders became more strict), their legal obligation is to provide prospective purchasers of the new home they built with the old form Owner Builder Declaration and Disclosure Notice within the first 10 years after occupancy.
Owner builders have a number of responsibilities and legal obligations under the Act and regulations. The HPO encourages all parties involved in the sale of owner-built homes to be informed and ensure an owner-built home is not offered for sale and/or sold without an OBDN being issued by the HPO and that the OBDN is provided to all prospective purchasers.
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