How to Handle a Deficiency List on a New Home in Alberta

The pre-possession walkthrough is often rushed. You are excited, the builder's representative is waiting, and small problems are easy to miss or to wave off. A deficiency list is how you turn what you notice into a written record.

This article explains how to build that list, how it connects to the Alberta new home warranty, and why holding back money is a question to settle with a lawyer before you do it.

This article covers the law of Alberta.

What a deficiency list is and why it matters

A deficiency list (sometimes called a walkthrough list or punch list) records items that are unfinished, damaged or not working when you inspect the home. It is usually signed or acknowledged by you and the builder's representative. Having it in writing helps avoid later arguments about whether a problem existed at possession or came afterward.

The list is not the same thing as a warranty claim. It deals with what should be corrected around the time you take possession. The warranty is a separate protection that continues after you move in.

How to record defects at the walkthrough

Go slowly, bring a copy of your purchase contract and plans, and ask for enough time. Daylight helps. Test things rather than only looking at them.

• Take dated photos and short videos of each problem, with a wide shot and a close-up.
• Write the room, the item and what is wrong, in plain words.
• Run taps, flush toilets, switch on lights, and operate the furnace and any ventilation.
• Open and close every door, window and cabinet.
• Check floors, stairs, railings, trim and baseboards for gaps, scratches or damage.
• Ask for a copy of the signed list before you leave, and keep your own photos.

Items such as flooring, staircases, baseboards, cabinets, railings, trim and fixtures are the kind of materials and workmanship defects the 1-year warranty covers. Systems like electrical, plumbing, heating, ventilation and air conditioning fall under the 2-year delivery and distribution systems coverage.

What the builder must fix and how the warranty fits in

What the builder has to correct before closing is mainly set by your purchase contract, so read what it says about completion, inspections and deficiencies. Separately, Alberta's New Home Buyer Protection Act requires builders to provide home warranty coverage on new residential homes, including condominiums. The minimum periods are below.

The 5-year building envelope coverage applies to the roof and walls, and warranty providers must offer builders the option to buy an extra 2 years. The 10-year coverage applies to the frame, including roof structural integrity, and the foundation.

Coverage starts at the earliest of the home being occupied, the permitting authority granting permission to occupy, or title transferring to the owner. For condominiums, unit and common property coverage run on separate policies and the start dates may differ. Exclusions are set by the Home Warranty Insurance Regulation and the warranty contract, so read your contract for what is not covered.

The Construction Performance Guide sets basic coverage requirements and recommended minimum performance expectations, but it is not a comprehensive list. An issue missing from the guide does not mean it is not a defect or that the warranty provider is not responsible for it.

Should you hold back money until items are fixed?

This is where people most often get into trouble. Whether you may withhold part of the price, how much, and what happens to your closing date all depend on the wording of your purchase contract. Refusing to close or withholding funds without a contractual basis could put you in breach.

Instead of deciding at the walkthrough, ask a lawyer to review the contract and your list before closing. Possible approaches, such as a written agreement with the builder on what will be fixed and when, are worth discussing with a lawyer. If you are buying a new condominium unit from a developer, the developer must also give written notice of material changes to the disclosed information before you take possession.

What to do next

• Get the deficiency list signed or acknowledged and keep a copy with your photos.
• Have a lawyer review your contract before you decide to hold back anything.
• Note your warranty start date and the end date of each coverage period.
• Follow up on open items in writing, and keep the replies.
• If a problem appears after possession, contact the warranty provider promptly.

To file a warranty claim, you contact the warranty provider, which explains its requirements, assesses the claim and works with the builder to resolve warrantable defects. Check your coverage dates first to confirm the issue is still within the period.

If you have a dispute with the warranty provider over a claim, Guideline 05-2022, the New Home Warranty Insurance Claims and Claims Disputes Guideline, addresses claim disputes. The Residential Protection Program can be reached at 780-644-1010 or 1-866-421-6929.

Frequently asked questions