The Most Important Facts to Know About Common Area Warranties
As we move into our brand new homes, we are mainly focused on what is happening inside our strata lot; most owners won’t know much about warranties and how warranties work. We often ask, "Do we have separate warranties for in-suite or strata lot issues?" or "Do we have separate common area warranties?" The answer to both questions is yes. In my last article I explained how the 12 month in-suite warranty applies. This time I am providing useful information on how strata corporations in British Columbia should address common area warranty concerns.
As a licensed strata manager I’ve specialized in starting up new construction strata corporations for over eight years. During this time I have never seen a “perfect” building. While builders work closely with their trades, engineers and city inspectors, once the building receives its occupancy permit and owners and tenants start moving in, the building systems are being put to the test. At this point I will start receiving phone calls and emails from residents regarding suspected warranty items, and the expectation of residents is to complete repairs as soon as possible. How does addressing common area concerns actually work?
Before I address that question, let’s look at what the common area warranty coverage looks like.
Typical Common Area Warranty Coverage
Developers are mandated under British Columbia’s Homeowner Protection Act to provide mandatory home warranty coverage for common areas. The typical common area warranty coverage includes the following:
- First 15 months – “Bumper to bumper” coverage for any defect in materials and labour in the common property of a multi-unit building.
- First 24 months – Coverage for any defect in materials and labour supplied for plumbing, heating, electrical, ventilation and air-conditioning delivery and distribution systems. In addition, coverage for any defect in materials and labour supplied for the exterior cladding, caulking, windows and doors that may lead to detachment or material damage to the new home.
- 5 year building envelope warranty – Coverage for up to five years for defects in the building envelope of a new home, including a defect which permits unintended water penetration such that it causes, or is likely to cause, material damage to the new home.
- 10 year structural defects warranty – Coverage for any defect in materials and labour that results in the failure of a load-bearing part of the home and any defect that causes structural damage that materially and adversely affects the use of the new home for residential occupancy.
Commercial strata corporations are an exception to the above and will normally have a 12 months bumper to bumper warranty coverage and nothing else. Now let’s get back to the original question: how does the strata corporation address suspected warranty concerns?
During the pre-interim and interim periods the developer handles them
Under the Strata Property Act, during the pre-interim and interim period, the acting strata council is the “owner developer”. The interim period and the developer’s duty to act as council will end on the last day of the month in which the first annual general meeting is held. During these time periods the developer will receive all building maintenance related correspondence. Most developers will have a separate customer service department specializing in warranty repairs. The developer’s customer service representative(s) will investigate the reported concerns with their trades and will determine whether it is indeed a warranty item or a maintenance issue. If it is found to be a maintenance item, the developer/council will inform the strata manager and will instruct them to make arrangements with a selected trade to make repairs under the interim budget.
After the first general meeting, the newly elected council handles them
Once a new council is elected at the first annual general meeting under the strata corporation’s bylaws, the new council will be responsible for managing common area warranty concerns and working with the developer’s customer service department. If the owners approved a budget that included an independent engineering review, the council will also work with the selected engineering firm to complete the warranty report(s) as it applies to certain warranty time periods. It is recommended that a building maintenance committee is formed at the first council meeting. This committee would be responsible for the administration and tabulation of all warranty concerns raised by residents, trades, council and strata employees (e.g. caretaker, security guard, janitor, concierge, etc.). The committee would also have to keep track of the warranty expiration dates, which are clearly stated on the “Common Area Warranty Certificate” provided by the developer. Warranty claims must be filed within the due dates!
Under the warranty program, developers will have ample time to address the strata corporation’s concerns. Both council and residents will be advised by the developer’s customer service representative, warranty company and engineer of the timelines of all repair work.
The developer’s repair crew should also be provided easy access into the building to allow for prompt repairs. The council is encouraged to assist the developer’s team, rather than creating obstacles with access restrictions. At the same time, the developer’s trades will have to take security concerns seriously as they are opening and closing common area doors.
It's easy to see how handling common area warranties is such a multifaceted issue. In closing, I'll also answer two frequently asked questions.
What happens if a warranty claim becomes contentious?
Effective communication is important as it can alleviate frustration; the working relationship between developers and councils should never be adversarial, but complementary. If there is a dispute over a specific concern the two parties must follow due process by contacting the engineer and warranty company for an independent review. When the strata council follows the proper steps to work with the developer and warranty company, all legitimate warranty claims should be addressed promptly within the applicable time period (15 months, 2, 5 and 10 years) or soon after.
However, if the council and owners feel that the strata corporation is being treated unfairly by the developer, warranty company and perhaps also by city hall, legal advice should be obtained. A legal expert can provide the needed guidance to the Strata Corporation to make a well informed decision and to proceed accordingly.
How do I, the strata manager, fit into all this?
Understanding what services a management company provides under their contract is very important in order to set expectations realistically. Strata Managers are not qualified to determine what is and what is not a warranty item and neither can they provide legal advice.
I often see that councils and owners take their frustrations out on strata managers when warranties and deficiencies become the main focus in a building, but the strata manager and the management company have very little to do with warranties and building deficiencies. Blaming a strata manager and the management company for building deficiencies and/or lack of follow up by developers and trades is ill-advised. Managing agents are always on the side of strata corporations and are there to help. The more owners understand due process and understand who is responsible for what, the sooner issues can be resolved.
Remember, knowledge is power and the more you know about your home and your community the more enjoyment you’ll get out of it.
About the Author
As one of the founding members of the Associa British Columbia New Construction Team, Laszlo continues to pilot projects, enhance systems and workflow processes to better serve clients. He specializes in all areas of transitioning new developments from Developer to Homeowners, including forward planning, consulting, budget planning, warranty consultation and the operation of phased, sectioned and airspace parcel developments. Laszlo’s main focus is to deliver best practices and services to Associa clients. These efforts include client appreciation seminars on various topics, including warranties; client retention strategies, as well as training, mentoring and evaluating Strata manager teams.