What You Need to Know About Home Warranties

Posted by Justin Havre on Wednesday, January 17th, 2018 at 10:20am.

Your Guide to Home WarrantiesHome warranties can be used to protect both brand-new and resale homes from a number of different threats. From faulty construction to shoddy appliance installation, warranties give homeowners a recourse besides dipping into their own home savings. But home warranties are different depending on where the home is purchased, and they're always going to be a worst-case scenario. Learn more about the basics before pulling the trigger on a home sale.

The Process

There's a bit of a process to warranties that buyers should be aware of. Even in the case of clear negligence on the part of a construction crew, it will involve several steps to get something fixed. So if a buyer moves into the home only to find that their drainage isn't working properly, they'll need to first ensure their home warranty even covers the drainage.

Some may only cover the building envelope (or the separator between the interior and exterior of the home.) Then the warranty company will need to call an unbiased third party to verify the home's drainage problems were indeed caused by a construction crew or other responsible party. Once this is completed, the home warranty company gets in touch with their insurance company so they can pay for the repair costs. (Typical home insurance will not cover these costs.)

Local Laws

Warranty programs vary widely, depending on where the home is located, so it's important to learn more about your target areas. Most builders are incentivized to have warranty protection as opposed to being required to have it. For example, in Manitoba builders may not be able to accept offers from higher risk buyers if they don't extend warranty protection.

In some areas though, such as British Columbia, builders can't get a permit without first enrolling in a Warranty Program. The local variations are also found in the limits of the warranty. If a buyer chooses Ontario, they enjoy the highest protection at $300,000, but in Manitoba, the limit only goes to $50,000. In Alberta, buyers enjoy protection if there are significant delays with the construction work.

Additional Facts

Most buyers won't take the time to read their warranties, but they probably should. Not only will the time limit of protection be different, but the terms themselves will vary from location to location. In Ontario, a warranty will cover structural problems plus labour mistakes. In Ontario, homeowners receive only two years of coverage against shoddy workmanship, but up to 10 years of protection on the entire structure. In the case of a resale home, buyers will generally enjoy home warranty protection as a perk of the sale.

If the previous buyers already had a warranty, then that warranty is automatically transferred to you (though the time limits won't be extended). Buyers may want to look into additional warranty protection they can purchase through a private company if the seller doesn't offer any protection for their Rutland South home. The total cost of the warranty is typically based on the purchase price of the home and is paid as a one-time fee.

Warranty protections are incredibly important when it comes to protecting a buyer, but they shouldn't be the only precaution a buyer takes. It's not going to be a very fun or easy process to get the repairs done, so buyers need to be diligent when it comes to researching reputable sellers. They should also make the investment in a quality inspector so there are fewer chances they'll even need to use their warranty.

Justin Havre

Leave a Comment