- New homes generally must carry warranty coverage of at least 2, 5 and 10 years for different kinds of defects.
- A warranty claim needs written notice to both the warranty provider and the builder before coverage expires.
- A damages claim for a misrepresentation in a disclosure statement may not start more than 2 years after it first came to your knowledge.
Finding defects in a new home or condo is stressful, especially when the developer is slow to respond. In British Columbia you may have several routes: the statutory warranty, rights under the Real Estate Development Marketing Act (REDMA), and a court claim.
Which route fits depends on what the defect is, when you found it and what you were told before buying. Some time limits are short, so it helps to act early and get legal advice.
This article covers the law of British Columbia.
Start with the warranty
A person may not build a new home unless it is registered for home warranty insurance covering at least 2 years for materials and labour, at least 5 years for the building envelope including water penetration, and at least 10 years for structural defects. Structural coverage applies to a defect in materials and labour that results in failure of a load-bearing part, or structural damage that materially and adversely affects residential use.
The shorter layer is staged: 12 months for defects in materials and labour and code violations (15 months for strata common property), and 24 months for items such as electrical, plumbing and HVAC distribution systems, exterior cladding, caulking, and certain windows and doors.
Exceptions matter. Permitted exclusions include landscaping, roads, site grading and septic systems, and defect exclusions include normal wear, normal shrinkage and damage by an owner or third party. Owner builders building for personal use under an authorization need not obtain warranty insurance or a licence, and the general warranty requirement does not apply to them; they face restrictions on selling during construction or within a prescribed period unless the registrar permits.
How to make a warranty claim
Give written notice with reasonable detail to both the warranty provider and the builder within a reasonable time after you discover the defect and before coverage expires. You cannot be required to pay a deductible or sign a release for covered repairs.
Where a provider sets a claim limit, the minimum is the lesser of the purchase price or $200,000 for a fee simple dwelling, and the lesser of the purchase price or $100,000 for a strata or multi-unit unit. For common property, it is the least of the total original purchase price, $100,000 times the number of units, or $2,500,000. Providers' policies may be broader than the minimums.
For strata common property, the first layer of materials and labour coverage runs 15 months rather than 12. Who must act on common property defects and how decisions are made depends on your strata's bylaws and circumstances, so ask a lawyer.
Rights under REDMA
Where a development property is marketed, the developer must file a disclosure statement that plainly discloses all material facts and contains no misrepresentation. A material fact includes one that affects, or could reasonably be expected to affect, the value, price or use of a unit.
| Remedy | When it may be available |
|---|---|
| Rescission within 7 days | After the later of the purchase agreement and your written acknowledgment of the disclosure statement |
| Rescission if no statement received | At any time, even after title transfer |
| Rescission for a missed amendment | If you did not receive a required amendment about a material fact reasonably relevant to your decision, and no more than one year has passed after transfer; an amendment alone gives no right if you already received a disclosure statement |
| Damages for misrepresentation | Action must start within 2 years of first learning of it |
On a damages claim, you are deemed to have relied on a misrepresentation in the disclosure statement, and you may sue the developer, its directors and other listed persons. It is a defence if the defendant proves you knew of the misrepresentation when you received the statement, and individuals have further defences.
If you rescind after title has transferred, the developer may apply to court for an order that you pay market rent for occupying the unit. Filing with the regulator is not an endorsement of a statement, since the superintendent has no duty to check it for misrepresentations.
Regulators, courts and time limits
BCFSA does not enforce purchasers' contract rights, which fall under contract law, but it investigates complaints and can take regulatory action against developers, for example over an inadequate disclosure statement or mishandled deposit. The superintendent may impose administrative penalties of up to $500,000 for a corporation and $250,000 for an individual.
A lawsuit is separate from a complaint. How time limits apply to other kinds of claims depends on your situation, so it is worth confirming with a lawyer early. Among the REDMA time limits, damages must be started within 2 years from knowledge, rescission for a missed amendment is available only up to one year after transfer, and the 7-day rescission window is shorter still. Rescission where you never received a disclosure statement is not limited in this way.
What to do next
- Write down each defect with dates, photos and any repair requests
- Send written notice to both the warranty provider and the builder
- Gather your purchase agreement, disclosure statement and any amendments
- Note the date you first learned of any misstatement, since it may start a clock
- If you live in a strata, raise common property issues with the strata council
- Speak to a lawyer early about which route and time limits apply to you
Frequently asked questions
Is the developer or the warranty provider responsible?
Both can be involved. You give written notice to both the warranty provider and the builder, and the warranty insurance is a requirement for building a new home.
Can I sue over a misleading disclosure statement?
You may sue for damages the developer, its directors and other listed persons, and you are deemed to have relied on the misrepresentation. The action may not start more than 2 years after it first came to your knowledge.
Can I cancel my purchase because of defects?
Rescission under REDMA is tied to the disclosure statement, not to defects as such. Examples are the 7-day period, or no statement received.
Does the developer have to fix everything?
Not necessarily. Warranty exclusions apply to items such as normal wear and shrinkage, and coverage differs by defect type and period.
Sources
- Real Estate Development Marketing Act (BC Laws) — bclaws.gov.bc.ca
- Homeowner Protection Act (BC Laws) — bclaws.gov.bc.ca
- Homeowner Protection Act Regulation (BC Laws) — bclaws.gov.bc.ca
- gov.bc.ca – Assignors of pre-sale condos (CSAIR) — www2.gov.bc.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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