FAQ'S

The Role of the Lawyer

The legal areas to be dealt with on the road to new home ownership consist of:

- AGREEMENTS or CONTRACTS: Preparation
- MORTGAGES: Registration and Disbursement of Funds
- TRANSFER OF TITLE
- POSSESSION & CLOSING

In most cases, contracts are straightforward agreements between buyer and builder using the builder's standard contract which includes mandatory clauses about warranty coverage or the contract prepared by The Alberta New Home Warranty Program.

These contracts are more than adequate to fairly represent the legal agreements between you and your builder regarding the terms and conditions of building what you need in a new home, where, when, how and at what price.

Many builders have ongoing business arrangements with a legal firm to deal with registering your mortgage and transferring title. Often the same firm will handle the closing of the sale and receipt of the final closing balance.

Highly qualified to fulfill its responsibilities, a legal firm arranged for by the builder acts on behalf of several parties. In answering your questions, the lawyer will advise you as to which party he or she represents.

The lawyer's duty regarding the mortgage is to ensure that it's properly executed by you, then properly registered on title in the first secured position, and that funds are disbursed according to instructions in the mortgage commitment letter and directions from the mortgage company.

On the closing of the sale, the legal firm fulfills its responsibility to transfer title to the purchaser.

One lawyer for all parties has its advantages. It may be efficient and cost-effective, representing a saving to all involved-including you, the mortgage company and the builder.

If you want independent advice or your transaction is more complex, you may wish to retain your own legal counsel - one whose expertise is in real estate matters-at your own expense.

Your legal counsel is your advisor, but you're the one making the business decisions surrounding your contract. In establishing a reasonable agreement and a close working relationship with your builder, it's worthwhile to remember that an equitable contract is one that's fair to both parties.

A Close Look at the Purchase Agreement

Purchase Agreements (or contracts) are a normal part of buying a new home. Your builder representative should be used to dealing with them every day and should be able to answer your questions and clarify any issues regarding contract details.

Essentially, the Agreement establishes the mutual obligations and a formal set of rules to govern the relationship between you and your builder. You should have a thorough understanding of the contract, and the contract documents including the Working Drawings, Lot Plan and Specifications.

To be valid, any verbal understandings or agreements that lead up to the contract signing should be documented in the contract. Unless they appear in writing, verbal agreements are not part of the contract.

Obligations of the Purchaser & Builder

As the Purchaser, you're obligated to pay for and take possession of the home you have contracted for upon its completion. The Builder is obligated to construct the home according to your contractual specifications and to complete the transfer of title.

Purchase Price & Adjustments

Purchase Price is the agreed upon price of your new home (and lot, if included through a Purchase Agreement) plus GST less the GST Rebate granted by the federal government to new homebuyers plus any adjustments. The Purchase Price also includes the cost of any agreed-to changes in the plans and specifications at the time of contract signing.

'Adjustments' to the Purchase Price are normal added costs associated with the purchase of a new home. These can include:
- Legal Fees
- Title Transfer Costs
- Mortgage Application Fees
- Interest Costs during Construction and at Interest Adjustment Dates
- Taxes and Supplemental Tax Assessments
- Refundable Landscape Completion Deposits
- Change Orders.

Builders have their own policies as to how Adjustments are handled. To ensure a full understanding of this area, discuss with your builder representative, and the lawyer handling the transaction, where and if these items are covered in your contract.

Financial Terms

The Terms of Payment for a new home may include deposits, progress payments, closing amounts and mortgage amounts.

These amounts and their timing are necessary details in your Agreement.

Your Mortgage Company will provide a letter of commitment regarding your mortgage arrangements. This details whether your mortgage is conventional (75% or less of the purchase price) or high ratio (more than 75% of the purchase price), the facts regarding any progress or completion funding, and specifics of Interest Rate Adjustments and Adjustment Dates.

An experienced Mortgage Officer at your financial institution is fully capable of answering any mortgage questions you might have.

More information on mortgage issues is provided in excellent brochures offered by most financial institutions. Or check the Canada Mortgage & Housing Corporation’s valuable guide: "Homebuying, Step by Step" available through CMHC's offices.

Conditions

Many Agreements require certain events or conditions to occur before they become "unconditional" or binding.

There may be unique conditions pertaining to your personal circumstances which you may want to include.

Be specific in the description of conditions and the dates when your conditions, or those of your builder, must be fulfilled or waived.

Possession Date

The most-asked question by new homebuyers has to be "when is the possession date?" In many cases, this date is an important part of initial agreement discussions.

The majority of Agreements make reference to a Possession Date, but firm commitment to that date by the builder will be qualified by a "force majeure" clause which allows the builder flexibility due to circumstances beyond its control.

Possession Date estimates are the norm since any number of situations including weather and the availability of specific building materials may have an impact on the projected date.

Recognizing the importance of your Possession Date however, most Agreements will specify that the Builder must confirm the date of possession in writing at least 35 days prior to the actual possession date.

45 Days to Possession

Your builder will review the Possession Date once your home is about 45 days from completion- at the Ceiling Stipple Stage. That's when the textured finish is applied to room ceilings and the first coat of primer goes on the walls.

Experience shows that 45 days is ample time to complete the typical new home. (Larger or custom homes with basement development or detailed finishing specifications require an appropriately longer period). Your builder takes some of that time to review all the finishing materials and effectively coordinate the finishing trades. If there are still finishing material or colour selections to be made, you should decide on them quickly at this point or risk disrupting the Construction Schedule.

Most construction schedules only allow 2 or 3 days before the Possession Date for final inspections and adjustments. Good teamwork with your builder at this stage avoids unexpected problems just prior to possession.

A problem could jeopardize your Possession Date. It doesn't happen often, but in such a timesensitive period, any hold-up in selecting finishing material, any late delivery, substitution or last minute change can cause delays.

Keep the lines of communication open. Don't be afraid to ask questions. If you and your builder representative work well as a team, you'll soon have a good idea of what has to be done. So even if you do run into snags, you'll be ready with decisions to help your builder co-ordinate the finishing trades.

The Last 35 Days

Soon you'll see an amazing transformation. Out from under construction will appear a finished home - one that reflects the care and attention both you and your builder have put into this exciting project.

At least 35 days before your new home is completed, you'll receive notification from your builder that your new home will be finished and ready for final inspection by a specified date.

Written confirmation of your new home's possession date triggers a number of steps that focus on the paper side of your relationship with your builder - steps which ensure that all the legal documents and other forms required are completed and available on your possession date.

The Lot Plan

The orientation and location of your new home on its lot are indicated on a scaled-down drawing of the lot. This 'Lot Plan' shows the distance to the home from the front, back and side property lines and positions the home in accordance with municipal bylaws for 'set-backs' from property lines and easements as well as a standard or reverse house plan. The locations of any easements are indicated along with details of "Grades".

Your home must comply with municipal bylaws including the percentage of lot coverage and setbacks. Otherwise, a variance relaxation must be obtained before construction can begin. This could involve extra costs and some time delays.

Your builder will obtain a real property report from the surveyor to confirm the home is in compliance with municipal bylaws before mortgage advances are made.

Proper planning of Grades is essential to avoid surface drainage problems that may cause moisture intrusion, and future structural movement. Grades also determine a number of other factors including the need for window wells and retaining walls, the design of steps and the profile of the lot after landscaping.

Blueprints or Working Drawings

The Significance of Working Drawings

At the time the Agreement is signed, final working drawings and a lot plan may not be available for reference. These working drawings are the normal planning tools a builder needs to construct any new home.

To establish the basis of an agreement with you, your builder representative may have to refer instead to a floor plan brochure, the builder's plan, name or model number, general specifications and a legal description of the lot - none of which constitute working drawings.

Before construction starts, it is important that the actual working drawings and material specifications be prepared, reviewed and approved by you. Your builder representative will need to discuss all the working drawings with you in detail.

Working Drawings, a Lot Plan and written Specifications are essential parts of the Agreement. The documents should accurately describe your new home's design, construction and materials. It's important that you clearly understand them so that you fully know what you are buying. Review the documents and address any concerns with your builder representative.

More About Working Drawings

Working Drawings are the road maps for building your new home. They're the actual building plans. These scaled-down two-dimensional working drawings serve a number of purposes. For example, your builder will submit a set to receive municipal building permit approval. Other sets will help guide suppliers in providing the necessary materials while sub-trades will use theirs as directions for completing their work according to plan. A set of working drawings consists of the following elements:

Exterior Elevations are detailed, scaled and dimensional drawings of the roof and exterior walls of your home. They show your home's profiles—front, sides and rear-and indicate the location and types of exterior finishing materials to be used.

Interior Floor Plans provide a scaled-down overview for each level of the home, including the basement. Among other things, these floor plans indicate exact room dimensions, the placement and size of windows, the location and swing of doors, the layout of electrical and plumbing systems and the configuration of kitchen and bathroom cabinetry. Added drawings may detail special construction features such as built-in wall units or fireplace surrounds.

Structural Plans are working drawings which provide cross-sectional views and details of the structural components of your new home. These include foundation footings, basement walls, roof trusses, floor joists and load-bearing beams.

Specifications

Written specifications expand on the working drawings in detail. Builders normally provide a 'General Specification' list which outlines construction and finish details. General Specifications also include details regarding the builder's warranty and policies for handling legal arrangements and title transfer.

Two 'Schedules' are attached to the General Specifications: the Exterior Finish Schedule and the Interior Finish Schedule. These note your choice of materials, colours, styles or model numbers. Revisions are possible prior to construction by requesting a Change Order.

If the builder provides Construction Allowances enabling you to make your own selections of such items as lighting fixtures, floor coverings, plumbing fixtures or appliances, then these allowances should identify exactly what is covered by each allowance and the dollar value allocated. Obviously, a less expensive selection than the dollar amount allocated will save you money while a more expensive choice will cost you more. These variances will be noted in your Statement of Adjustments.

If you vary from the General Specifications, then the details of what you want—brand names, colours, sizes, model and style numbers for example- should be noted in the Finish Schedules or on a Change Order before construction starts. Specifications are an important part of the Agreement between you and your builder. Check to ensure the blueprints and specifications do not contradict each other.

What Happens if I Make Changes?

Each builder may have a different policy regarding changes to plans or specifications but there is one common rule you should follow: communicate with your builder representative as soon as possible and have any agreed-upon change in writing acknowledged with appropriate signatures.

A change in the working drawings or specifications of your home represents a change to the Contract or Agreement and thus requires the approval of both parties as well as proper documentation such as an Extra to Contract addendum, a Change Order or a Change Request.

Trades people on the building site are not permitted to make changes on your direction. They must receive approved purchase orders or similar authorization from the builder.

The earlier you request a change, the better. Your builder may have more flexibility in accommodating it.

There are a number of reasons why it's not always possible for a builder to make changes to working plans or specifications. There may be regulations, developer architectural controls or structural reasons that prevent it. Perhaps pre-construction work has advanced to a point where the builder has issued purchase orders, obtained permits and made the necessary commitments for materials and labour to build your home as agreed. Consequently a last-minute change could be difficult, timeconsuming and expensive.

It's important that you discuss the costs of any changes with your builder representative and secure a clearly detailed, written agreement to any change before proceeding. Sketches, diagrams, precise dimensions, specific materials and model numbers are all essential if the change is to be made properly. Unclear change orders are definitely something to be avoided. They can lead to frustration, disappointment and issues later on at closing. (See Also: Section 5 Page 38 "Closing Meeting and Final Payment") Keep in mind that changes may affect your possession date. Discuss this with your builder representative.

Substitution & General Conformity Clauses

Your builder's intent is to follow the plans and specifications you have agreed to while constructing your home in compliance with The Alberta Building Code in effect as of the date the building permit is issued.

However, your builder may need to make substitutions or changes in materials or details as permitted by Code due to unforeseen circumstances. For example, a manufacturer may have discontinued an item you have specified or certain material can't be supplied in time to meet the construction timetable. As a result, your builder reserves the right to make a substitution of equal or better quality. Generally this should be done after first consulting with you and proposing an alternative for your consideration and approval. This right is included in your builder's General Specifications and is part of the Agreement.

Small construction variations are permitted by the 'General Conformity Clause' in the Agreement. Your new home isn't being manufactured on an automated factory assembly line. Instead, it's a one-of- a-kind project built by skilled craftspeople in an outdoor environment using natural materials that can be affected by temperature and humidity. Even though your builder is conscientious and dedicated to your satisfaction, minor variations within industry tolerances are normal and can be expected.

How Developer Architectural Controls Work

To ensure the development of appealing new communities, land developers today often regulate things like the placement of homes on lots, the mass of exterior elevations, exterior design details, types of exterior finishes, and colours through architectural controls. No doubt that's because more and more buyers are insisting on architecturally-controlled developments.

Architectural controls can bring added value to new communities and to your investment. Yet these design pre-requisites can also cause delays in developer approval of your new home plans if they don't conform to the developer's guidelines.

A copy of the architectural controls is available from the developer or your builder representative. Following those guidelines, your builder representative works with you to make suitable exterior design, material and colour choices. Your builder then submits your proposed home and lot plans along with your exterior finish specifications to the developer for approval. Architectural controls vary from development to development. If you change lots, ensure that the architectural controls have not changed.

To ensure conformity with the overall development concept, the developer may require modifications to the colour or material choices you've made on your Exterior Finish Schedule. Or the developer may require that extra architectural details be added to the house.

Revisions may result in added costs which your builder representative will discuss with you before obtaining your approval to modify plans or the Exterior Finish Schedule.

Once the developer's architectural approvals are received, you'll want to review the final working drawings, lot plan and specifications carefully with your builder representative. If everything is acceptable to you, you should 'sign off' on the plans. Then the builder will advise the developer who gives overall approval to proceed-a requirement before construction can begin.

Financial Issues & Safeguards

The purchase and construction of your new home involves substantial financial commitments on the part of you and your builder.

The Alberta New Home Warranty Program provides you with specific financial protections. Nevertheless, it's important that you exercise prudence in dealing with the monetary details of your purchase.

Through your builder, the protections you enjoy from The Alberta New Home Warranty Program start with your first deposit to the builder. They continue beyond possession with warranties that cover materials, workmanship and structural integrity.

Deposit Protection

Cash Deposits are payments that bind your agreement with a builder. Deposits are paid prior to the start of construction.

The Alberta New Home Warranty Program protects your deposits of up to 20% of the purchase price for a single family home, to a maximum of $100,000, when your builder is a Registered Builder Member of the Program.

If your deposits are greater than the protection limits, you should have a clear understanding of what conditions need to be put in writing as part of your Agreement with the builder to deal with the release or return of those sums which exceed The Alberta New Home Warranty’s Program's protection limits. You may want to consult with your real estate lawyer if you're unsure.

Coverage starts when the Deposit Protection Receipt is issued by your Builder Member. Each time you make a deposit, your builder representative will complete The Alberta New Home Warranty Program Deposit Protection Receipt. Your builder will mail a copy of the receipt to the Program on your behalf, or your builder representative will provide you with two copies along with a pre-addressed, postage-paid envelope. You mail one copy to the Program and keep the other copy for your records.

Progress Payments

Progress Payments and/or Mortgage Draws are a normal part of your builder's financial plan for the construction of your home.

The flow of funds to your builder should closely match the value of the work in place. Consequently, progress payment advances are timed to correspond with the completion of the various stages of construction.

Standard formulas are used to determine the value of work in place at each stage. Canada Mortgage and Housing Corporation (CMHC), your mortgage company and your builder all use a similar formula.

If mortgage progress payments are part of your Agreement with the builder, the mortgage company normally requires an inspection by an accredited appraiser who will verify the stage of construction and the value of work in place, then recommend when the mortgage progress payment can be released.

Progress payments are safeguarded under The Alberta New Home Warranty Program's Builder Performance Protection coverage which provides up to $30,000 towards the construction costs or the discharge of Builders' Liens.

Builders' Liens

Purchaser safeguards offered by Builder Performance Protection through The Alberta New Home Warranty Program still require that you be prudent in the disbursement of funds to your builder and, if required, use Builders' Lien Holdback arrangements available to you under the provincial Builders' Lien Act to safeguard your interests.

To protect your interest, you should arrange for a Builders' Lien Holdback to be retained from each progress payment (whether it's a cash progress payment or a mortgage draw) if you are proceeding under a Construction Contract and are the 'Owner' or Title Holder of the lands and/or the mortgage is registered on title in your name during construction. There may be other circumstances where a Lien Holdback is appropriate and you should consult with the lawyer handling the transaction.

It is proper that Builders' Lien Holdbacks are held in trust by the builder's lawyer with a "Trust Condition" which states that the funds are to be released to the builder at the expiration of the legislated Lien Holdback period and that Title is not encumbered by any registered liens at that time.

Builders' Lien Holdbacks may not be required if you are proceeding under an Agreement for Sale or a Purchase Agreement and Title Transfer is at Time of Possession so you are not classified as an 'Owner' during construction. Many excellent builders operate in this manner. You should learn what your builder's particular Builders' Lien policy is as part of your contract discussions.

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.

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:

1. Advise your builder in writing of your concerns.
2. Initial contact (i.e. by phone) between the buyer or home- owner and the Program's Consumer Representative.
3. 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.

1. During construction
2. 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:

1. Mediation
2. Conciliation
3. 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.

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.

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.

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:

1. Sinks, tubs and plumbing fixtures.
2. Counter tops and cabinets.
3. Light fixtures, mirrors and glass.
4. Windows and screens.
5. Tile, carpet, hardwood floors, resilient flooring.
6. Doors, trim and hardware.
7. Paint and drywall.
8. 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.

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.

If You Have Water Penetration Issues Concerning the Foundation & 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.

If There Are Structural Issues In the First Year

The Alberta New Home Warranty 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.