No person may build, sell or even offer to sell a new home except in compliance with the Homeowner Protection Act (HPA). This means that you may not accept a listing of a new home unless and until the owner has complied with the requirements of the HPA.
Keep in mind that the definition of a new home in the HPA not only includes “a building, or portion of a building, that is newly constructed or being constructed and is intended for residential occupancy,” but also “a home that is or is being substantially reconstructed.” If, after renovations, 25% or less of a home’s original structure above the foundation is remaining, the Homeowner Protection Office (HPO) considers that home substantially reconstructed and thus a new home for the purposes of the HPA.
Whether a home is entirely new or substantially reconstructed, before accepting the listing, confirm whether the owner or builder has complied with the regulations regarding home warranty insurance, and that the home can be legally offered for sale.
All residential builders in British Columbia must be licensed with the HPO. Before obtaining a building permit, builders must arrange for third-party home warranty insurance on proposed new homes. In areas where building permits are not required for new home construction, builders must ensure that licensing and warranty insurance are in place before construction is started.
Only insurance companies who have been approved by the Financial Institutions Commission (FICOM) and who meet the requirements of the HPO can provide home warranty insurance. A list of authorized home warranty insurance providers is available on the HPO website.
Standards of coverage, commencement dates, exclusions and limits on coverage are set by government to ensure clarity and a consistent base-level of consumer protection.
Owner-built homes are an exception to the licensing and warranty insurance requirements, but there are specific requirements for owner-builders:
- Individuals planning to build a new home for their personal use must meet eligibility requirements, pay a fee, and obtain an Owner-Builder Authorization from the HPO before starting construction of the home.
- Owner-builders must occupy the new home themselves for at least one year after obtaining an occupancy permit. They are not permitted to sell or rent the new home during that one-year period. The owner-builder is also not permitted to sell a new home “as is” during construction without permission from the HPO.
Owner-builders who sell their home within 10 years of obtaining an occupancy permit are personally liable to purchasers for defects in the new home during that 10-year period. An owner-builder’s obligations are similar to the obligations of a licensed residential builder under a policy of home warranty insurance:
- 2 years for material and labour
- 5 years for defects in the building envelope
- 10 years for structural defects.
Purchasers can sue the owner-builder for these defects and the owner-builder’s liability cannot be waived in a contract or agreement. There are some reasonable exceptions (for example, defects caused by someone other than the builder, natural disasters) and these are set out in detail in the Regulation.
Owner-Builder Disclosure Notice
Owner-built homes may not be offered for sale or sold without providing the Owner-Builder Disclosure Notice to all potential purchasers.
- For owner-built homes completed since November 19, 2007, Owner- Builder Disclosure Notices must be obtained from the HPO and will not be released until the one-year occupancy requirement has been verified.
If you are acting for either an ownerbuilder or a potential purchaser, you can check the HPO’s New Homes Registry to determine whether a new home built under an Owner-Builder Authorization has met the occupancy requirement and can legally be sold. The Land Title Office advises the HPO whenever the title of an owner-built home is transferred and they pursue enforcement action if the sale is illegal (which may include compliance orders, monetary penalties, court injunctions, or convictions under the HPA). Licensees who participate in an illegal sale could also be the subject of disciplinary action under the Real Estate Services Act.
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