New home warranties are one of the most troublesome issues for strata corporations. New home warranty reporting is confusing, complex and time-consuming. Reading the warranty fine print is as fun as open heart surgery.
Some think of a home warranty much like a new car warranty: you have a problem, you call the builder and it is taken care of: all good.
Wrong.
The new home warranty acts more as an insurance policy than a consumer warranty. Reporting requirements are very strict and failure to follow the “fine print” may negate coverage.
Strata corporations need to navigate through a minefield of strict reporting requirements, exclusions, and complicated legal wording in order to engage warranty coverage.
Often, these warranties are referred to as a “10-year” warranty.
Wrong.
The 10-year portion is a limited part of the coverage.
A review of strata property warranty certificate shows the following warranty time frames:
- One year for defects in material/labour;
- 15 months for defects in common property;
- Two-year defects for:
- gas, electrical, plumbing, heating, ventilation, and air conditioning delivery and distribution systems; and
- exterior cladding, caulking, windows, and doors that may lead to detachment or damage;
- Five years for the building envelope; and
- Ten years for structural defects.
Much of the coverage expires before the five-year mark, so it should not be thought of as a “10-year warranty”.
What I see all too often is:
- strata councils assume that a new building will not be defective and even if it is, they are covered by warranty;
- they do not investigate reported problems soon enough or properly, i.e. by retaining an engineer;
- if the problem becomes a major issue, often the coverage has expired and claims are denied;
- even if claims are reported in the warranty period, often the strict reporting requirements are not met and claims are denied.
So, what can you do to improve the chances of coverage?
The following list should assist strata corporations in navigating the rough seas that is warranty reporting:
- Keep track of all warranty documents and other information from the developer.
- Supplier or contractors may have their own warranties so ensure you have the details.
- Know the warranty expiry dates and reporting requirements for all warranties.
- Read the warranty documents: know the rules in order to ensure you maintain coverage.
- Retain a qualified independent consultant to complete an end of warranty inspection.
- Report any defects to the builder AND warranty provider in writing: do not rely on calls and verbal promises that defects will be repaired.
- Report early, report often, provides very specific details and document everything.
- Ensure a proper maintenance program is in place: this will assist in prolonging the life of the common property and help catch problems before they become serious.
It may seem that retaining an engineer to assess a new building is overkill but it is not. It helps protect warranty coverage and ensure that problems not covered under warranty are discovered early. More importantly, it protects property values as potential buyers will review these reports and will be more likely to purchase in a complex that is proactive with maintenance/repairs.
Taking these steps will go a long way to assisting a strata corporation with warranty coverage especially if matters get ugly and outside legal advice is required.
By being organized and acting early, a strata corporation may save money on repairs by engaging the warranty provider/builder to repair defective work.