Frequently Asked Questions

What do I need to know about defects, deficiencies and holdbacks?

Deficiency Holdbacks

At the time of possession, it’s entirely possible that not all the work on your home will be complete. The most common reason is cold weather. Winter has a tendency to delay all kinds of exterior work—from applying paint or stucco to pouring concrete driveways and finishing the landscaping. These kinds of weather-delay problems are known as ‘Seasonal Deficiencies’.

It’s appropriate to consider holdbacks for deficiencies. These holdbacks are funds held in trust by your mortgage company or the builder’s lawyer until the deficiency is completed. Most builders can provide you with a list and dollar values for each identified item.

A Deficiency Holdback may represent the value of several incomplete items. As each item is completed, the holdback amount related to that item is released. The Program’s Builder Performance Protection coverage is contingent upon the homeowner being prudent and holding back appropriate funds for deficiencies. You are responsible to ensure these monies are held in trust with appropriate conditions.

Defects

At the time of possession, there may be work that is completed but not to your satisfaction. All these items should be identified at possession in writing on the Certificate of Possession and signed by both parties.

These items are covered two ways: by the builder’s first year material and workmanship warranty and by The Alberta New Home Warranty Program. Consequently, holdbacks for these items are not permitted by most builders.

(reprinted from page 16 of the guidebook: “from purchase to possession and beyond”)

How can I ensure my builder will respond to my needs?

Ensuring Your Builder Responds to Your Needs

Sometimes it may seem like your builder representative doesn’t understand or recognize the importance of your concerns. This situation can be frustrating and stressful for you. However, there’s no need to jeopardize an otherwise excellent relationship because your builder representative misunderstands an issue or the significance you place on it.

To clarify your thoughts it helps if you put them down in writing before talking with your builder representative. You need to establish clear communication so your builder representative has a better appreciation of your needs. In return, you’ll be better able to learn how your builder plans to deal with your concerns.

By addressing an issue in a positive manner, you can discuss it with your builder representative in an upbeat, problem solving way instead of looking for fault and finger-pointing.

The first step to resolving any problem is to learn the other party’s perspective on the issue. In many cases this quickly reveals the fact that each party’s expectations have not been clearly expressed or understood.

Both parties need to discuss whether their expectations are reasonable and achievable.

Both parties need to examine what potential solutions would deliver the desired result.

In most instances, more than one solution can present itself. It’s important to review them all with your builder representative so that you can agree on a specific course of action and the time frame for making it happen.

Both parties then have to accept the appropriate level of responsibility for rectifying the issue.

An agreement in writing needs to be made which states what will be done, when and who assumes responsibility for what costs.

What happens if an issue remains unresolved? The Alberta New Home Warranty Program offers numerous additional solutions.

Key Points For Your Inspection

Watching your home come to life is an exciting time. You’ll probably want to be on site several times during construction to witness the progress. However, your visits should be arranged through your builder representative for the appropriate times. In so doing, you can also help reduce safety and liability concerns.

The key to knowing what’s going on is to inspect work at the completion of each major stage of the Construction Schedule. By using these key stage points for your reviews, you can enjoy the construction process without the stress of worrying about every little detail.

During the construction process, there will be days when your home looks more like an ugly duckling. Many things will be incomplete and some things may be so early in their construction you might not even recognize what they are yet.

You should look for construction that conforms to the working drawings you approved as well as workmanship that’s consistent with the builder’s show homes in the same price range.

Some small variations in dimensions can be expected because your home is being built on-site in an outdoor environment using a variety of building materials.

If you have a major concern, discuss it with your builder representative as soon as possible.

At the completion of framing and rough-in for plumbing, electrical and heating—just prior to the drywall stage—it’s worthwhile to review progress on-site with your builder representative. This is an excellent time because the work to-date is in place and still visible. Any necessary corrections can be accomplished more easily and with more economy than if the drywall stage had started.

Once the drywall stage is complete, construction becomes much more detailed. At this point, planning for a firm possession date can become more realistic.

Resolving Warranty Issues

In the vast majority of cases, the relationship between a new homebuyer and builder is a positive and lasting one. Warranty issues are dealt with through timely solutions presented and implemented by professionals in the business of home building.

What happens when things don’t go quite right? There are times when the relationship between a Purchaser and Builder can come under stress because of warranty issues. There have also been cases where a Builder has ceased operating and is no longer able to look after warranty and service responsibilities.

The Alberta New Home Warranty Program offers a variety of services and protections to homebuyers which address situations like when a Purchaser and Builder don’t agree or when a Builder is unable to meet performance obligations.

The Means to Seek Solutions

As a new homebuyer, you have full recourse to use The Alberta New Home Warranty Program’s dispute resolution process to address any issues or concerns you may have.

Before the Program can undertake its process of seeking solutions to customer issues, there are three steps you need to take:

Advise your builder in writing of your concerns.
Initial contact (i.e. by phone) between the buyer or home- owner and the Program’s Consumer Representative.
Completion by the buyer or homeowner of the written “Request for Program Assistance” form available from the Program prior to the expiration of the warranty period.

The Program’s assistance may be requested at any time during your home’s coverage period.

During construction
After possession:

During the First Year Workmanship & Material warranty period;
During the 5 year (or optional 10 year) Structural warranty period.

There are three methods of finding solutions and settling issues in The Alberta New Home Warranty Program’s process:

Mediation
Conciliation
Arbitration

These processes can be used at various points. For example, if there’s an issue during construction, most solutions can generally be found through Mediation—a process of discussion between Builder and Purchaser in which the Program acts as facilitator.

If mediation is unsuccessful, the majority of solutions are reached through the Conciliation process when issues are investigated and a report is issued outlining a course of action.

If an issue still remains unresolved following the release of the Conciliation Report, you or your builder can advance to Arbitration—a more formal, time-consuming and expensive process for both parties involved. In most cases, Builders and Purchasers or homeowners are able to deal with issues quickly and effectively before the need for Arbitration.

(reprinted from pages 21, 25, 45 & 51 of the guidebook: “from purchase to possession and beyond”)

What is an acceptable delay during construction?

Dealing With Potential Delays

Weather-related construction delays do happen. Nevertheless, Alberta builders have developed effective methods of dealing with extreme cold and wet conditions.

To minimize weather delays, your builder will place special emphasis on enclosing the structure of your new home and connecting utilities to create a protected working environment as soon as possible.

Some exterior work can be left until conditions improve. These items generally involve applying stucco, parging and paint, pouring concrete and final grading of the lot. Meanwhile, inside work can carry on according to schedule.

Your builder representative can explain the impact of weather-related delays should they occur and the steps being taken to work around them.

Other normal delays can involve building, electrical and gas inspections that must be conducted by the appropriate authorities at certain stages before work can continue. If your builder is waiting for one of these inspections, activities can come to a temporary halt. Change orders can also cause delays.

Between each stage of construction, another delay typically happens as sub-trades and suppliers coordinate their moves to and from your new home.

If any delay extends beyond 5 working days, it’s wise to consult with your builder representative to learn about the effect on your Construction Schedule.

If excessive delays are occurring, please contact the Consumer Representative at The Alberta New Home Warranty Program.

(reprinted from page 22 of the guidebook: “from purchase to possession and beyond”)

What are my responsibilities when I inspect my home at possession?

What to Look for in Your Occupancy Inspection & New Home Orientation

Some call it the ‘Possession Inspection’, others call it the ‘Occupancy’ or ‘Pre-Occupancy Inspection’. But no matter the title, the intent is the same: to let you review and confirm that work on your new home is complete and satisfactory or else identify any outstanding items. In so doing, you and your builder representative can discuss how these items will be rectified and how your builder’s first year materials and workmanship warranty works after you move in.

Another purpose of the inspection is to provide your builder representative with the opportunity to orient you to your new home and all its features. This orientation can include detailed demonstrations of equipment as well as useful information on maintenance and upkeep. Your builder representative will also discuss the service program and how to request service work during the first year.

Allow enough time for a thorough inspection of your new home and a comprehensive orientation. Normally this can take several hours.

Experience shows it’s important to focus all your attention on your new home inspection and the orientation information being provided. For that reason, it’s also best if friends, relatives, children and pets see your home at another time—not during your Occupancy Inspection. This inspection is between you and your builder representative.

There are two things to look for in your Occupancy Inspection that may require your builder’s attention:

Deficiencies are items in the agreement that have not been completed at the time of inspection. Seasonal Deficiencies are the most common type, where weather and climate factors make it impractical to complete certain kinds of exterior work.
Defects are items that have been installed and completed but require additional work to meet the quality standard. These are normally cosmetic defects regarding fit, finish or appearance that can be easily spotted during the inspection.

This pre-occupancy inspection and record is an important step in completing your contract with your builder and establishing your warranty.

Conducting Your Occupancy Inspection

If you do spot a defect, make sure it’s clearly identified on the inspection form (i.e. marks on north interior wall of bedroom #2; driveway not installed).

Your builder should respond to each and every item noted on the list within a reasonable period of time.

In the case of items not yet completed or installed, agreement should be reached on the value of the work to be finished. That amount should then be held under a trust agreement, generally with the builder’s lawyer. These funds will be released when these is agreement between the builder and homeowner that the items are complete. (See Also: Section II Page 16 “Deficiency Holdbacks”; Page 16 “Defects”.)

It’s worthwhile to take a systematic approach to your inspection. Start with the exterior of the home, then move to the interior of the home, moving through each room in order.

Your builder representative will have The Alberta New Home Warranty Program Certificate of Possession or a form of the builder’s own making which identifies key items in each room. By following that form, you can inspect all the same items as your builder.

If you bring along a checklist, share it with your builder representative as you move from room to room. That way, you can both check off items together.

Poor weather can hamper exterior inspections. In such cases, you should make arrangements with your builder representative to complete the exterior inspection at another time.

Some inspection items need even closer inspection. These are items which can be damaged easily during the move-in process. Such damage would not be covered by a warranty claim because it would not be due to a defect in materials or workmanship. Therefore it’s worthwhile to carefully inspect and take note of the items listed below—before you take possession—so that any damage or flaws can be recorded for follow-up corrective measures:

Sinks, tubs and plumbing fixtures.
Counter tops and cabinets.
Light fixtures, mirrors and glass.
Windows and screens.
Tile, carpet, hardwood floors, resilient flooring.
Doors, trim and hardware.
Paint and drywall.
Finish on appliances.

Any damage not noted at this time is not covered under The Alberta New Home Warranty Program’s Warranty coverage.

At the end of your inspection, you’ll be asked to approve the overall finish of your home by signing the appropriate documents while noting any items still to be corrected. These items, as well as other items that may become apparent during the first year (latent defects), are covered by the builder’s warranty and backed by The Alberta New Home Warranty Program. Once you’ve approved and signed the inspection documents, you should receive a copy of them.

The Program’s Inspection Form is also the Certificate of Possession which means a copy will be forwarded to The Alberta New Home Warranty Program and this triggers the issuance of your home’s Warranty Certificate. The date the builder and homeowner sign the Certificate of Possession is the recognized possession date and is the date the Program’s Warranty coverage begins.

(reprinted from pages 32 & 33 of the guidebook: “from purchase to possession and beyond”)

What should I expect from my builder during the first year of warranty?

Your Builder’s Service & Warranty Program

Builder Members of The Alberta New Home Warranty Program have an excellent reputation and record of service with new homebuyers.

Each year, builders are recognized for consistent performance with Service Awards. Some have earned Awards for 15, 20 and even more than 25 years of maintaining high levels of customer satisfaction.

“Timely”, “Responsive” and “Effective” are key words to describe the commitment of The Alberta New Home Warranty Program and its Builder Members to warranty and service issues. Their approach is one of working with homeowners in a courteous and respectful manner to find appropriate solutions to issues that might arise.

During the first year of ownership, your builder’s service and warranty program is dedicated to:

Addressing all pre-occupancy defects within a reasonable time.
Completing all pre-occupancy deficiencies as soon as possible.
Responding within a reasonable time-frame to warranty and service issues brought to the builder’s attention throughout the first year.
Ensuring all warranty issues are completed by the end of the first year warranty period.

Individual builder service and warranty programs may differ as far as methodology goes, but every Builder Member of The Alberta New Home Warranty Program must have a service program to address customer concerns. Coverages are outlined in the Warranty Certificate that was part of your initial agreement as well as in the Warranty Certificate that is mailed to you shortly after possession of your new home.

It’s advisable to re-acquaint yourself with the particulars of your builder’s service and warranty program. For example, you’ll want to know how to request service or warranty work through your builder as well as the builder’s typical response time to service and warranty requests, and what exactly your builder’s service and warranty program covers.

Addressing Pre-Occupancy Defects

Your builder understands prompt attention to items noted in your Occupancy Inspection is the best way to meet and exceed your expectations for service and warranty work.

You can expect items to be completed within a reasonable time frame after occupancy—generally, within a month—unless it is a seasonal item or special materials have to be ordered. This seasonal work is generally finished by the end of June but in some years the weather isn’t cooperative enough to allow that to happen until later.

Gaining access to your home in order to complete work can sometimes be a problem for your builder if no one is at home during the day. It’s a good idea to establish a relationship with the person coordinating the completion work on your home to make the necessary arrangements for access.

Dealing with Deficiencies

Items that are incomplete or missing at the time of Occupancy Inspection are often the result of seasonal conditions.

For homes occupied in winter months, it’s often necessary to wait until Spring and good weather to complete exterior work like pouring concrete, landscaping, applying stucco, parging and paint. Check with your builder regarding their schedule and policy for completing seasonal deficiencies.

Deficiencies warrant prompt attention. Your builder should keep you informed about the seasonal work schedule as it progresses and advise you about any other potential delays; for example, when needed trades or materials aren’t readily available. Your builder knows it’s important to finish outstanding items within a reasonable time frame so that you can fully enjoy your new home as soon as possible. Your builder also knows there’s a contractual obligation to fulfill that commitment.

As deficiencies are completed, any money held back, in trust, by the builder’s lawyer can be released.

Service & Warranty Work in the First Year

Typically, a new home undergoes a number of changes in its first year due to factors like dryness, extreme cold, heat and humidity. These changes may result in situations like “nail pops”. Your builder’s service and warranty program will respond to correct them and outline when these normal service issues should be addressed.

It’s normal to wait for an extended period before scheduling some types of corrective work such as nail pops, drywall cracks, squeaky floors and stairs. That way, maximum shrinkage of wood framing and drywall panels can take place, and the maximum number of situations requiring attention can be identified. What’s more, by waiting, the necessary corrective work needs only to be done once during the year—with minimal disruption to your daily routine.

In some instances, materials or systems may not be performing properly. Situations of this type will be rectified by your builder.

All manufacturer’s warranties and guarantees accompanying installed components in your home such as roofing and windows, appliances, the furnace and water heater—should be passed on to you by your builder representative so that you can enjoy any extended protections they provide beyond one year. If you don’t receive warranty material and instruction manuals for installed items, be sure to ask for them.

If you have any questions regarding normal first-year service or response times, check with your builder representative to get the answers you need. There’s no better source for first-hand information.

In the event of after-hours emergencies, most builders also supply emergency telephone numbers for electricians, plumbers and heating contractors so you can contact them directly and advise your builder accordingly on the next business day.

Be aware that warranties provided by the Builder Member and The Alberta New Home Warranty Program are time limited. All outstanding first year material and workmanship issues should be noted in writing to the Builder prior to the first year anniversary of possession. Program involvement must be initiated no later than 60 days after that date in accordance with the Warranty Certificate.

(reprinted from pages 41, 42 & 43 of the guidebook: “from purchase to possession and beyond”)

What if I have water penetration issues concerning the foundation and basement?

Perhaps the most common call of concern to the Warranty Services Department of The Alberta New Home Warranty Program involves water penetrating basement walls or floors.

A basement isn’t constructed to be water proof. It is made to be “damp proof” according to the requirements of The Alberta Building Code.

Water penetration does not mean there’s an issue involving structural failure, material quality or workmanship. Other issues may be involved such as the subsiding of soil around the foundation (which effectively changes the grade), watering too close to the foundation or removing down spout extensions so rain water is released too close to foundation walls.

Talk to your builder first about your concerns. The Program is available to assist the discussion with information and advice. It can also identify where the water is coming from and why in order to provide solutions.

Upon formal request within the applicable warranty period, a Program Inspector will investigate. The source of the water and the cause for its penetration will be determined along with solutions for eliminating the source of the problem.

In most cases, a change in the grade is the cause. The homeowner or a landscape contractor hired by the home owner may have somehow changed the drainage patterns around the home causing water to run towards the foundation walls instead of away.

The Inspector will refer back to the home’s Lot Plan or Grade Slip to determine the correct surface profile for the lot as it was originally planned and approved.

The Program’s Inspector will recommend the steps necessary to eliminate the source of water penetration problems. The Program has a Surface Water Management brochure which explains water movements around your home, and how to effectively reduce the possibility of water penetration into your home.

(reprinted from page 58 of the guidebook: “from purchase to possession and beyond”)

What if there are structural issues after the first year?

The Program will answer your needs.

A structural defect is a failure of a load-bearing component of your home to provide support. By that definition, a basement crack isn’t a structural defect, but it may be an indication that such a possibility exists.

If you have concerns regarding a possible Structural Defect, contact the Program. A Consumer Representative will take down the details, send out the appropriate forms to request an inspection, and a Program Inspector will schedule an appointment to investigate your concerns.

If the Inspector determines there is a structural failure, the Program will take the necessary steps to discover the cause or causes of the failure. The Program will develop a plan to correct the cause or causes of the failure, and then implement the repairs within the limits of the structural integrity coverage.

The load bearing structural components of your home.

(reprinted from page 57 of the guidebook: “from purchase to possession and beyond”)