Can you get home warranty insurance after a house is built in BC?

Homeowners search for "after-the-fact warranty" when something has gone wrong on a house build. The builder left halfway. The house was finished but nobody enrolled it. Or a buyer has found out that the house they want has no warranty on record. Each of these has an answer in B.C. law, and each answer depends on how far construction got before the problem started.

Here is how the rules work, taken from the Homeowner Protection Act and BC Housing's own bulletins. They apply the same way in Vancouver, Burnaby, North Vancouver and every other part of the province.

When home warranty insurance has to be in place

Section 22 of the Homeowner Protection Act says a person must not build a new home unless it is registered for coverage by home warranty insurance from a warranty provider. The same section says a new home must not be sold, or offered for sale, while it is being built or within 10 years of its first occupancy permit, unless it is covered or exempt.

BC Housing's Regulatory Bulletin 8 explains the order of events. The builder registers the home with BC Housing and enrolls it with a warranty provider. BC Housing then issues a New Home Registration Form. Before a city issues a building permit, it must see that form or proof of an exemption, such as an Owner Builder Authorization or a purpose-built rental exemption. Where no building permit is required, construction cannot start until the form is issued.

Enrollment and the policy itself are two separate stages. Bulletin 8 calls enrollment a commitment that can be withdrawn. The policy only starts once the home is complete, and coverage has to stay in place without a gap for construction to continue legally. The coverage periods are the familiar 2-5-10: two years on materials and labour, five years on the building envelope (the roof, walls, windows and other parts that keep water out), and 10 years on structure. We explain those periods in more detail in the 2-5-10 home warranty, explained.

So for a house that is already built, there is usually no step where warranty gets added at the end. The cases below are the ones where coverage changes hands or gets ordered partway through.

Your builder left before the house was finished

This is the most common reason people look for after-the-fact coverage. A custom home contract ends during construction: a dispute, a builder that closes, a contract ended by one side. If the builder or its warranty provider cancels the enrollment, BC Housing calls that a de-enrollment, and Bulletin 10 is clear about the result. Construction cannot continue, and the home cannot be offered for sale, until coverage or an exemption is back in place.

If the home is not yet substantially complete, Bulletin 10 gives the owner two options:

• Hire a new general contractor, who registers the home and enrolls it in home warranty insurance. That builder becomes responsible under the policy for all of the work the previous builder arranged, as well as its own.
• Apply to BC Housing for an Owner Builder Authorization and finish the home as your own general contractor. You then carry the full statutory warranty liability for all of the earlier work and all of the work still to come.

In either case, the person who takes over carries the liability for the home from the start of construction to its completion. That is why a new builder inspects the work it did not do before it agrees to finish the house. On a takeover, ask the warranty provider early what it needs to see before it accepts the enrollment.

The builder who finishes the house answers for the whole house. Price the takeover with that in mind, and expect the new builder to open walls and floors to check the earlier work before signing for it.

What "substantially complete" means here

Much of this turns on whether the first builder managed "all or substantially all" of the construction, which is the phrase the Act uses to define a residential builder. Bulletin 10 adds two points. Reaching lock-up, when the house is closed in and can be locked, does not count as substantial completion. And a substantially complete home is usually one where a warranty policy could be issued for at least all of the structure and the building envelope.

If the home is substantially complete when the contract ends, Bulletin 10 says the general contractor remains legally responsible for its work as the residential builder, and de-enrolling at that stage contravenes the Act. Re-enrolling also costs more: the bulletin lists re-inspections, administrative fees and possibly higher enrollment fees. The policy may exclude design, labour or materials the owner supplied after the builder left, so both sides should agree in writing with the provider on what was done before and after the contract ended.

The BC Safety Standards Appeal Board has tested where that line sits. In a decision issued January 29, 2020 (BCSSAB 18 (1) 2019), BC Housing had ordered a builder that left a Bowen Island house partway through to enroll it in warranty. The decision records payments to the builder of $700,000, a rounded figure, against an expected budget of no less than $1.2 million. On that measure alone, the board put the builder's share at 58 percent of the work. The board set the order aside. It read "substantially all" as nearly all of the construction, including interior work, and noted an earlier case where a builder that had completed at least 80 percent was found responsible. It also noted that the house's warranty status would stay imperfect for any later buyer, whichever way it ruled.

The house was finished and never enrolled

Sometimes a homeowner hires a contractor to build a house under an Owner Builder Authorization, and the contractor ends up running the job. BC Housing's Regulatory Bulletin 25 deals with this directly. An owner builder must build or directly manage the work themselves. A hired person who arranged, engaged in or managed all or substantially all of the construction is acting as a general contractor and must become a licensed residential builder and arrange warranty for the home, whether or not they were paid for it.

Bulletin 25 gives a working test: work that covers any two of the three warranty components (finishing and mechanical systems, building envelope, structure) has likely triggered the requirement. In that case BC Housing can cancel the owner builder authorization and require the builder to enroll the home, and the resulting policy may exclude parts the builder did not do. Bulletins 4 and 25 put the monetary penalties at up to $25,000, and BC Housing can also issue compliance orders.

Any contract term that waives the warranty requirement has no effect under the Act. A homeowner who says they do not want warranty cannot sign it away.

Owner-built homes and the voluntary policy

An owner builder authorized by BC Housing does not need a licence or third-party warranty. Bulletin 4 says the authorization has to be in hand before construction starts. In exchange, the owner builder carries the 2-5-10 obligations personally under section 23 of the Act, to every buyer, for 10 years from first occupancy. That liability cannot be waived by agreement.

Owner builders can arrange a voluntary home warranty policy, and those who do are no longer subject to the personal statutory liability. Bulletin 4 mentions the option without setting a deadline for it, so ask a warranty provider about timing before construction starts.

If an owner builder sells within 10 years, they must give each buyer a disclosure notice from BC Housing stating that the home was owner-built and whether warranty insurance is in place. The home cannot be offered for sale, sold or rented in its first year except with the Registrar's approval in special circumstances. We cover the authorization rules, including why they do not reach a new multiplex, in can you build your own multiplex in BC as an owner builder?.

Selling a house or project that lost its coverage

Bulletin 10 also covers sales and lenders. A project can be sold during construction if its warranty coverage stays in place. If it was de-enrolled, a licensed residential builder has to re-enroll it before it is offered for sale, or the seller has to get special permission from the Registrar under section 22.

On a foreclosure during construction, whoever runs the sale under the court order usually becomes responsible for putting warranty in place before the sale. The bulletin says there are no special exemptions for mortgage holders or receivers. The same rules apply to a multiplex: every new home in a triplex or fourplex in Vancouver or Burnaby needs coverage or an exemption before it can be sold.

Renovations that turn a house into a new home

A renovation does not normally need a New Home Registration Form. BC Housing's Regulatory Bulletin 6 sets out when it does. If 75 percent or more of the structure above the foundation is new, or 25 percent or less of the original structure remains, BC Housing treats the house as substantially reconstructed, which makes it a new home under the Act.

This matters because a renovation scope can grow during the job. A house that started as a renovation and ended up almost entirely rebuilt may need warranty that was never arranged. The bulletin's examples include a fire rebuild on an old foundation and a house on a new foundation with a new second storey and roof. If your renovation could get close to these thresholds, settle the question with BC Housing and your builder before the permit. Our guide to licensing and the 2-5-10 warranty covers how renovation and new-home rules differ.

How to check any house before you buy or take it over

BC Housing's New Homes Registry lets you search by street address and city, or by legal description. It lists homes registered since November 19, 2007, and shows whether the home is enrolled, the warranty provider and the builder, and any de-enrollment on the file. For a home registered between July 1999 and November 19, 2007, BC Housing asks you to call 1-800-407-7757.

The warranty is attached to the home, so it passes to each new owner until the periods run out. BC Housing lists the minimum limits as the lesser of the first owner's purchase price or $200,000 for a detached home, and the lesser of the purchase price or $100,000 for a strata unit. Warranty providers are regulated by the BC Financial Services Authority.

Before you sign anything on a house with a gap in its warranty record, ask these questions:

• Was the home ever enrolled, and is there a de-enrollment on the registry?
• How far did construction get, and who managed which parts of it?
• Is there an Owner Builder Authorization, and does a disclosure notice exist?
• Will a licensed builder enroll the home, and what does the warranty provider want to inspect first?
• What work did the owner or other trades do that a new policy may exclude?

This is a summary of how the Act and BC Housing's bulletins describe these cases, and it is general information. BC Housing's bulletins describe themselves as a convenience and tell readers to check the Act, and the 2020 appeal board found that Bulletin 10 does not have the force of law. For a specific house, call BC Housing's Licensing and Consumer Services branch and talk to a construction lawyer. When the question is who should finish the build, how to hire a custom builder you can trust covers what to check, and you can talk to Venture Pacific about a stalled or unfinished build.

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