All about the warranties on new houses
Maybe you don't know it, but the world of new housing projects just lived a great revolution. Since January 1st 2015, the Garantie de construction résidentielle (GCR) is the only organization authorized by the Régie du bâtiment du Québec to issue the obligatory warranty certificates.
This modification was long expected. Many are reassured to know that the warranties are now managed by an independent non-profit organization and not by contractors associations like it used to Any appearance of conflict of interest is now dismissed.
Gina Gaudreault, President and CEO of the GCR has helped us dissect the ins and outs of this new regulation. You want to understand the where, when, what, and how? This article is for you!
Who is concerned?
It is simple: anyone who has purchased a new house after January 1st 2015 falls under this new regulation. This mean that the construction permit must have been issued after January 1st, same thing for the preliminary contract. The construction must have started in 2015. If the construction has started in 2014, even if the sale contract has been signed in 2015, the GCR does not apply.
What types of houses are covered by this warranty?
Three types of properties are covered by the GCR:
Semi-detached single-family unit and row-houses;
Multi-family houses of 2 to 5 units (duplex, triplex, etc.);
Condominiums (condos) of no more than 4 units.
Please note that there are a few exceptions. In case of a self-construction project, in which there are no contractor involved, the warranty does not apply. In addition, the warranty plan for new residential buildings only covers entirely new buildings. If a part of an existing building is used during construction, the coverage will not apply.
How are the coverages reclaims?
The new coverages offer reclaim to the users.
A single-family house; a maximum coverage of $ 300,000. As an example, this type of building used to be covered up to $ 260,000 under the previous program.
A multi-family house; $ 200,000 per unit.
A condominium; $ 300,000 per unit.
As for the nature of the coverage itself, we are talking, for example, of final completion of the work, construction fault and defect repairs, carrying and storage costs, etc.
Advance payments are also covered by a better protection. While advanced payments used to be covered up to $ 39,000 only last year, this amount has been increased to $ 50,000 under the GCR.
Are inspection procedures reinforced?
Yes! And for Gina Gaudreault, it is an essential element of the new structure that is being set up. "A new house or condo buyer ideally does not wish to have to submit a claim!", reminds us the CEO of the GCR. For her, the priority is to improve the quality of construction.
It is why the organization has implemented an inspection program (validated by the RBQ) based on a rating assigned to a contractor. This rating is assigned by taking into account the results of previous inspections, the number of claims, satisfaction surveys, etc. Depending on the rating, the inspection frequency will be inversely proportional. Therefore, some contractors could see 100 % of their constructions inspected, and if the quality of their work does not improve, they could lose their license.
The GCR expects to perform 7,000 inspections in 2015. "We aim quantity, yes, but also quality", explains Ms.Gaudreault. "We are demanding with our inspectors whether they are engineers, technologist or architects. We refuse complacency", she affirms.
Will it be more expensive?
Given the reclaims and the restructuring, the costs are indeed a little bit higher with this new warranty. This new regulation also sets minimum fees for the premium. So, for a single-family house we are talking about fees ranging from $ 1,050 to $ 1,550. For a multi-family house, fees range from $ 1,550 to $ 2,050.
An interesting point: it is the contractor rating we talked about earlier that will influence the cost. Therefore, the entrepreneur that is very well classified will pay less, and it will translate into a reduction of fees for the buyer. And added incentive!
What it the biggest modification in the warranty for new houses?
Fundamentally, one needs to know that the whole structure has been modified. Not only the warranty administrator is now a non-profit organization, but the board composition is dictated by regulations and includes individuals from different backgrounds: consumers associations, engineering, architecture, law, governmental institutions and contractors associations.
The Régie du bâtiment will keep the powers to sanction and will remain responsible of the supervision of the GCR's board. "Our organization will be more accountable and will have to provide more reports, and that is all for the better!",concludes Gina Gaudreault.
For more information on the mandatory warranty, please visit the GCR's website here.
Stock images: Shutterstock
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