Homeowner Protection Act Information

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  • Information

    BCFSA’s information are clear, concise, easy-to-read explanations of the requirements for real estate professionals under the Real Estate Services Act (“RESA”), Real Estate Services Regulation (“Regulation”), Real Estate Services Rules (“Rules”), and other applicable legislation.

    This information are intended for use by real estate professionals, to support their understanding of the standards they must meet in the delivery of real estate services.

Your Obligations when Assisting an Owner Builder

As a real estate professional, you must act in your client’s best interests and with reasonable care and skill. This includes ensuring that you understand and meet any legislation that may impact your client’s ability to sell a home. When it comes to owner-built properties, the owner must comply with the requirements of the Homeowner Protection Act (“HPA”) before you enter into a listing. BC Housing has tools available to assist you in verifying whether your client has met all the requirements to sell their home.

(a) Requirements for an Owner Builder

Individuals who are looking to construct their own property for personal use must first pass an exam and obtain an Owner Builder Authorization from BC Housing. Once an owner builder has received authorization, they are exempt from further licensing and the requirement to obtain third-party home warranty insurance that is required for all developers. They will, however, still be personally liable for any defects in construction for 10 years should they sell the home during that time. An owner builder is liable for the same requirements in place for new home warranties – two years for materials and labour, five years for the building envelope, and 10 years for structural defects.

Once the owner builder has authorization, they must meet a number of obligations such as managing the construction of the home themselves. Failure to adhere to the requirements under the HPA could result in prosecution and penalties of up to $25,000.

In most cases, an owner builder cannot offer their property for sale until construction is complete and they have occupied the home for at least one year. If an owner builder chooses to sell their property within the first 10 years of it being constructed, an Owner Builder Disclosure Notice must be provided to the buyer before both parties can enter into any agreement for the sale of the property. The notice informs buyers that the home was built under an Owner Builder Authorization and whether a voluntary home warranty is in place.

(b) When an Owner-built Home Can Be Listed for Sale

In order for an owner-built home to be sold:

  • The construction must be complete. The property cannot be sold during construction; and
  • The property must have been occupied for at least one year by the owner builder.

An owner builder who wishes to sell their property within the first 10 years of the property’s construction, they must obtain an Owner Builder Disclosure Notice from BC Housing and provide the document to potential buyers before entering into a purchase agreement. This disclosure must be presented to buyers and will inform them that the home was built by an owner builder and whether a voluntary third-party warranty is in place.

New Home Warranties for Licensed Residential Builders

The HPA requires that all new homes (including strata properties) built in B.C. by licensed residential builders be covered by third-party home warranty insurance. Builders must apply to BC Housing if they wish to take advantage of the limited exemptions available.

(a) Listing properties Under Construction

A new home in B.C. that is under construction cannot be sold unless the property is covered by a new home warranty or falls into an exemption provided by the HPA. These exemptions include applications to BC Housing for undue hardship. If you are acting for a buyer, you have an obligation to act in their best interests and ensure that you discover all relevant facts respecting real estate your client is interested in purchasing. You must obtain verification that a new home warranty for the property is in place and that your client understands the scope of coverage provided.

As noted above, exemptions from a new home warranty exist for homes built by owner builders and for manufactured homes, hotels, dormitories, care facilities and floating homes. Restrictions on these exemptions exist so please refer to BC Housing for more information.

Strata properties comprise a large segment of properties sold during the construction phase. While developers typically use their own sales contracts, you must protect your clients’ interests by verifying that a new home warranty is in place at the time of the offer.

(b) Statutory Protections

New home warranties cover a portion of a property for a defined period as laid out in legislation. The warranty must cover:

  • Materials and labour for at least two years after the date of occupancy;
  • The building envelope for at least five years after the date of occupancy; and
  • The building structure for 10 years after the date of occupancy.

If you are a strata manager or rental property manager, you must ensure that you are aware of any warranties a developer must have in place for any property you are managing.

Your client, be it a buyer or seller, is not permitted to waive, exclude, or limit the protections required by the new home warranty. An attempt to draft such a waiver could be a violation of your fiduciary obligations to your client and would be of no effect under the HPA.

Learn more about BC Housing legislation