Since I work with a reputable builder in the city of Saskatoon, I do know a few things about warranties. New home warranties are basically a third party insurance policy that your builder purchases for your home. In the city of Saskatoon, the law requires that the builder offer a third party warranty. In other parts of the province, the builder may decide to provide their own warranty, instead of a third party warranty. Often times, your mortgage broker will require proof that the home is registered with a new home warranty before granting mortgage approval.
In a nutshell, it protects your investment if something happens to go wrong. You have someone "in your corner" so to speak, if the builder and you can't come to an agreement of understanding to resolve any outstanding issues. At a minimum, the warranty should provide deposit insurance (in case it is legally refundable, but can't because of bankruptcy, fraud, etc on fault of the builder), protection against warrantable material and workmanship, as well as structural or mechanical defects In the home, usually up to a period of one year from the date of possession. Also included is building envelope protection as well. You may be eligible to apply for living expenses to offset the cost of temporary accommodations, etc. (provided that the supplier has included this in their warranty.)
In Saskatchewan, there are a number of new home warranty companies that the builder may purchase from. Blanket Home Warranty Ltd., National Home Warranty Programs Inc. New Home Warranty Program of Saskatchewan, and Progressive Home Warranty Solutions Inc. When looking at doing a custom home build, or purchasing a new spec home, it is pertinent that you find out about the warranty that is offered. You may have to use a financial holdback of funds to protect yourself against unfinished or seasonal work not completed. Purchasers have an obligation to inspect the property prior to possession with the builder, or his representative, and obtain written acknowledgement of any warrantable deficiencies in the home , and any work not complete. Purchasers must make arrangements for repair or completion of work. Some companies offer additional warranties that may be purchased for added protections of major structural defects for additional time frames.
It is your responsibility to find out the warranty offered by your potential builder, and do your research. Ask questions of the builder, and go to the website of the warranty provider. Find out the limitations, exclusions, expiry dates, and read up about the process of how to make a claim.
*some information taken from the Canadian Home Builders Assn website*