Whether you own a condo, are about to buy one, or hope to do so someday, one of the most important things you should know about is “2-5-10” home warranty insurance.
For more than 20 years, homeowners in B.C. have been protected by 2-5-10 warranty insurance, which includes 2 years’ coverage on labour and materials, 5 years on the building envelope (including water penetration), and 10 years on structural components.
But even with this legal protection, a warranty claim can still go wrong for a variety of reasons.
Lesperance Mendes Lawyers, a Vancouver law firm with 25-plus years of experience advising strata corporations and homeowners on warranty claims, has put together a list of the top 10 ways a warranty claim can fail. Be sure to make note of them so you can avoid these common mistakes.
10. Being slow off the mark
Home warranties have 15- and 24-month deadlines for reporting some defects. At this early stage, some problems (like a wet ceiling or window condensation) may seem too small to justify a warranty claim. Sometimes, however, these are early warning signs of a significant problem that should be reported immediately to the warranty provider and builder.
9. Failing to retain a qualified consultant to prepare a warranty report
A consultant can uncover problems that may not be apparent to most owners. A warranty report is one of the best investments a strata corporation can make.
8. Retaining the developer’s consultant to prepare warranty reports
Some owners believe the best person to inspect their condominium is the developer’s engineer, who has inside knowledge about its construction. But the engineer may feel conflicted about pointing out problems in areas of the building that were their responsibility. A fresh set of eyes avoids this problem.
7. Retaining a consultant too late
Warranty reporting is a specialized field, and the consultants who understand it are busy. Reports can take months to prepare, and sometimes conclude that it’s not possible to determine if a defect exists without further investigation. To avoid running out of time, strata corporations should line up a qualified consultant at least six months before warranty deadlines.
6. Repairing defects too early
Unless a problem requires immediate action (for example, a burst pipe), an owner should give the warranty provider a reasonable opportunity to investigate, evaluate and repair defects. Owners who repair before giving their warranty provider this opportunity run the risk of having their claim denied.
5. Keeping owners in the dark
Strata councils sometimes neglect to report to owners during the claims process. This can lead to suspicion and anger when owners discover that a warranty claim has been denied and costly repairs are required. To avoid conflict, let owners know what’s going on through council minutes and at general meetings.
4. Letting the builder drive the process
Warranty providers often leave it to the builder to respond to claims. Builders, in turn, often delegate this work to their trades. This means warranty repairs are often left to contractors who minimize problems in their work and are busy on other projects. Make sure the warranty provider remains front and centre throughout the claims process.
3. Putting up with unreasonable delay
The authority that governs warranty providers issued an Advisory Letter in 2016 stating that if a builder cannot complete repairs within a reasonable time frame – generally 30 days after a request from the warranty provider – another contractor should be hired to complete the work. Despite this directive, significant delays continue to occur. Strata councils should set reasonable time frames for warranty providers to investigate defects, evaluate coverage and complete repairs.
2. Neglecting legal deadlines
Many owners are unaware of the deadlines for enforcing their legal remedies. These include a two-year deadline for suing warranty providers, builders and other responsible parties. The dates upon which these deadlines expire are often uncertain. The safe course of action is to seek early legal advice on the strata’s options.
1. Taking no for an answer
Many owners give up once a claim is denied. Surely warranty providers, who handle claims daily, have a good understanding of what’s covered by their warranties, right?
Not necessarily. On June 16, 2022, the BC Financial Services Authority reported on an earlier examination which found that the claims-handling practices of some warranty providers might harm owners’ interests through a lack of timely and complete responses to claims. While the Authority noted that warranty providers had made some improvements, concerns about claims handling remained. Legal advice can help owners address these concerns.