After The Sale | 2-5-10 Warranty
Warranty When You Sell
The five-unit REDMA threshold does not appear anywhere in the Homeowner Protection Act. Mandatory home warranty insurance attaches to a new home, so a duplex half carries the same coverage as a unit in a sixplex. This is the obligation small developers most often assume they have escaped.
Key takeaways
- Coverage is set by statute, not negotiated. Section 22(2) fixes the minimum periods.
- Two years on materials and labour, five on the building envelope, ten on structural defects.
- No unit threshold applies. Every new home sold carries it, regardless of building size.
- Owner-builders must occupy for a year after the occupancy permit and cannot sell or rent during it.
- An owner-builder who sells stays personally liable for defects for ten years.
The three coverage periods
Section 22(2) sets minimums. An insurer may offer more, and none may offer less.
| What is covered | Minimum term | Section |
|---|---|---|
| Defects in materials and labour | 2 years | s.22(2)(a) |
| Defects in the building envelope | 5 years | s.22(2)(b) |
| Structural defects | 10 years | s.22(2)(c) |
Homeowner Protection Act s.22(2), read 6 September 2026.
Why size does not reduce the obligation
Developers who have worked through the REDMA threshold sometimes carry the five-unit logic into warranty and conclude that a small building escapes it. It does not. The Homeowner Protection Act regulates the construction of new homes and the licensing of residential builders. Its trigger is a new home, not a development property.
A fourplex produces four new homes. Each one is sold to a buyer who receives the statutory coverage. The insurance is arranged by the builder as part of building, and the cost is a line in the construction budget rather than an optional extra to price at the end.
This is the clearest example of a broader point running through this hub: BC's rules for selling new housing live in several statutes with different triggers. Clearing one threshold tells you nothing about the others.
The owner-builder trap
Owner-builder authorisation exists so a person can build a home for their own use without holding a residential builder licence. It comes with conditions, and the conditions are what catch homeowner developers who intended to sell some of the units.
After obtaining the occupancy permit, an owner-builder must occupy the home for at least one year, and may not offer to sell, sell, or rent it during that year. Section 20.1 of the Homeowner Protection Act sets out the restriction and allows the registrar to permit an earlier sale where the owner-builder would otherwise face undue hardship.
Two consequences matter for anyone planning to fund a build by selling units. The first is the timing: a plan that depends on selling at completion collides with a one-year occupancy requirement. The second is the liability: an owner-builder who does sell remains personally liable for construction defects for ten years, which is a different exposure from selling as a licensed builder with warranty insurance behind the units.
A subsequent purchaser who resells within the ten-year period must also give the next buyer the owner-builder disclosure notice. The obligation travels with the home rather than ending at the first resale.
Building to sell against building to occupy
The decision to build as an owner-builder or through a licensed residential builder should be made against the exit plan, at the start. Building to occupy one unit and hold the rest as rentals fits owner-builder authorisation. Building to sell units at completion does not.
Engaging a licensed residential builder puts warranty insurance behind each unit and removes the occupancy restriction and the personal ten-year liability that come with owner-builder status. On a project whose plan is to sell, that is normally the right structure, and it is far cheaper to choose at the outset than to unwind at completion.
What each period is actually protecting
The three periods are not arbitrary. They track how long different classes of defect take to reveal themselves, which is why the terms get longer as the defect gets harder to see.
Materials and labour defects show up quickly. A door that does not close, a fixture installed wrong, finishes that fail. Two years is enough time for an occupant to find them through ordinary use, which is why that period is the shortest.
Building envelope defects show up over seasons. Water gets into a wall assembly through a detail that was wrong from the day it was built, and the evidence appears after repeated wetting and drying cycles. Five years covers enough of those cycles for a failure to become visible. This is the period BC's leaky condo experience shaped.
Structural defects can stay hidden longest and cost the most to remedy. A framing or foundation problem may not present for years, and when it does the repair reaches through finished construction. Ten years reflects both the discovery time and the consequence.
Where warranty sits in the budget
Warranty insurance is arranged as part of building, through the licensed residential builder, and the premium is a construction cost. Treating it as a closing cost to sort out near completion creates a problem, because the coverage relates to how the building was built and the provider underwrites the builder as well as the project.
For a developer selling units, this means the warranty question is settled when the builder is engaged. A builder who cannot obtain warranty coverage for the project cannot deliver units that can be sold in the ordinary way, which makes it a question to resolve during procurement rather than during conveyancing.
Best for, fails when, verify before
Owner-builder works when
You are building to live in the home, will occupy it for the required year, and have no plan to sell inside ten years.
It fails when
The plan is to sell units at completion to repay construction financing. The occupancy year blocks it and the ten-year liability follows you.
Verify before you build
Whether your builder is licensed, that warranty insurance is arranged per unit, and that your exit plan matches the route you chose.
What the buyer should ask for
A buyer of a new multiplex unit should see the warranty policy before completion, not after. The document names the provider, states when each coverage period begins, and sets out what is excluded. Exclusions are where expectations and coverage most often part company.
Ask who built the home and whether they are a licensed residential builder. If the answer is that an owner-builder built it, ask for the owner-builder disclosure notice, which the seller is required to provide, and understand that recourse for defects runs against that person for ten years rather than against an insurer.
Common mistakes
- Carrying the five-unit logic across from REDMA. The Homeowner Protection Act has no unit threshold. A duplex half carries the same coverage as a sixplex unit.
- Taking owner-builder authorisation on a project meant for sale. The one-year occupancy requirement blocks the exit and the ten-year personal liability outlasts it.
- Leaving warranty to closing. The provider underwrites the builder and the project, so coverage is settled when the builder is engaged.
- Handing over a strata without the warranty dates. A four-owner corporation with no manager needs to know when the five-year envelope coverage expires.
- Assuming a resale buyer has no coverage. The remaining balance of each period runs with the home.
Warranty in a strata building
Once a multiplex is stratified, two parties have an interest in the warranty. Each owner holds their own unit, and the strata corporation is responsible for the common property. The building envelope, which carries the five-year coverage, is largely common property, so a claim on it is usually made by the corporation rather than by one owner.
That has a practical consequence for a small strata. A four-unit corporation is four owners with no professional management, and the window for acting on an envelope claim closes five years after the warranty began. Someone has to notice the problem, understand it is a warranty matter, and act while the coverage is live.
A developer handing over a small strata can help by making sure the warranty documents reach the corporation, along with the dates each period expires. The strata ownership guide covers what else the new corporation inherits at handover.
Where to go next
- GST and tax on unit sales covers the other obligation with no unit threshold.
- The 2-5-10 warranty in design covers what coverage means for construction decisions.
- Construction contract types covers how builder engagement is structured.
Frequently asked questions
What is the 2-5-10 warranty in BC? +
It is the mandatory home warranty insurance set by Homeowner Protection Act section 22(2). Coverage runs at least two years on defects in materials and labour, at least five years on defects in the building envelope, and at least ten years on structural defects, each measured from the date the warranty begins. Insurers may offer longer terms and none may offer shorter.
Does a fourplex need home warranty insurance? +
Yes. The Homeowner Protection Act is triggered by the construction of a new home, and it contains no unit threshold comparable to REDMA's five-unit floor. A fourplex produces four new homes, so four units carry the statutory 2-5-10 coverage. The insurance cost belongs in the construction budget rather than being priced at sale.
Can an owner-builder sell the home they built? +
Not during the first year. BC Housing requires an owner-builder to occupy the home for at least one year after the occupancy permit and prohibits offering to sell, selling, or renting during that period. Section 20.1(2) of the Homeowner Protection Act allows the registrar to permit an earlier sale where the owner-builder faces undue hardship.
How long is an owner-builder liable for defects? +
Ten years. An owner-builder who sells remains personally liable for defects in the construction for ten years from the relevant date, which is a materially different exposure from selling units backed by warranty insurance arranged through a licensed residential builder. The liability follows the person rather than ending at the sale.
What is the owner-builder disclosure notice? +
A notice that must be given to a prospective buyer of an owner-built home before the sale, explaining the warranty position. The obligation is not limited to the first sale: a subsequent purchaser reselling within the ten-year period must also provide it. The notice travels with the home for the length of that period.
When can an owner-builder build a second home? +
BC Housing states that where this is the first home built under owner-builder authorisation, a second authorisation is available no earlier than 18 months from the date of first occupancy of the first home. The rule prevents owner-builder status being used as a route to serial development without a builder licence.
Does warranty coverage apply to common property in a strata? +
Warranty on a stratified building covers the units and the common property, which is why the strata corporation as well as individual owners has an interest in the coverage. Confirm with the warranty provider how the policy is structured for your specific building. [VERIFY] the common property terms on your own policy before completion.
When does the warranty period start? +
Section 22(2) measures each period from the date the warranty begins. For a purchaser that is generally tied to occupancy or to the transfer of title, and the precise trigger is set out in the warranty policy itself. Read the policy for the specific commencement date rather than assuming it runs from completion of construction.
Can a buyer and seller agree to waive the warranty? +
No. Section 22(2) sets a statutory minimum for mandatory home warranty insurance on a new home. It is not a contractual term the parties can negotiate away, which is deliberate: the coverage exists to protect a buyer who has no practical way to inspect what sits behind the finished walls.
Should I build as an owner-builder or hire a licensed builder? +
Match the choice to the exit plan. Owner-builder authorisation fits building a home to live in, given the one-year occupancy requirement and the ten-year personal liability on a sale. A project whose plan is to sell units at completion fits a licensed residential builder, with warranty insurance behind each unit.
Does the 2-5-10 warranty cover a laneway house or ADU? +
Mandatory home warranty insurance attaches to new homes, and an accessory dwelling built as a separate home falls within that description. Coverage details vary with how the unit is built and whether it is being sold, so confirm the position with the warranty provider for your specific project before relying on it.
What happens to the warranty when a unit is resold? +
The remaining coverage runs with the home for the balance of each period, so a buyer purchasing a three-year-old unit has the remainder of the five-year envelope coverage and the ten-year structural coverage available. The two-year materials and labour coverage will have expired. Confirm the remaining terms with the warranty provider.
Sources and references
Coverage periods quoted from Homeowner Protection Act section 22(2), read 6 September 2026. Owner-builder occupancy and resale rules per BC Housing's owner-builder guidance.
See What Your Lot Can Build and Sell
Enter any BC address to see how many units the zoning allows, which side of the five-unit REDMA line that puts you on, and what the return looks like.