As of 1999, all residential builders1 in British Columbia are required to be licensed by the Homeowner Protection Office and arrange for third-party home warranty insurance on proposed new homes prior to obtaining a building permit. In geographic areas where building permits are not required for new home construction, licensing and warranty insurance must be in place prior to the commencement of the construction. Owner builders are exempt from the licensing and warranty insurance requirements.
Home warranty insurance can only be provided by insurance companies approved by the provincial Financial Institutions Commission. Minimum coverage and allowable exclusions for third-party home warranty insurance are set by legislation. As a minimum, homes built by Licensed Residential Builders must have 2-5-10 year home warranty insurance - the strongest construction defect insurance in Canada. Coverage includes 2 years on labour and materials (some limits apply), 5 years on the building envelope and 10 years on the structure of the home.
1"residential builder" means a person who engages in, arranges for or manages all or substantially all of the construction of a new home, or agrees to do any of those things, and includes developer and general contractor.
The most common exemption from the licensing and warranty insurance requirements is a new home built under an Owner Builder Authorization issued by the HPO.
The Act and Regulations exempt the following classes of “new homes” from the requirement for home warranty insurance, reconstruction fee and builder licensing:
- manufactured homes; includes:
- mobile home (CSA-Z240)
- factory built home (CAN/CSA-A277)
- hotels and motels
- care facilities
- float homes
Note: if any of the classes (2, 3, 4 and 5) above are strata-titled, they are captured by the definition of new home and require home warranty insurance, licensing and the reconstruction levy (where geographically applicable).
The Act and Regulations exempt the following classes of “new homes” from the requirement for licensing, home warranty insurance and HPO fees. The owner must provide a restrictive covenant that is registered on title restricting the sale of any dwelling unit for a ten year period, and have the HPO fill out section D, Proof of Exemption, on the HPO New Home Registration Form:
- Multi-unit buildings owned under a single title and constructed for rental purposes.
- Multi-unit buildings that are strata-titled, but held under one ownership and constructed for rental purposes.
- 3 or more dwelling units built for rental purposes and owned under a single legal title.
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