A group of Winnipeg condo owners, embroiled in a lawsuit over repairs needed to their new condos, could be out tens of thousands of dollars because they didn't get enough help from their new home warranty to cover the repairs.

The owners estimate costs to repair problems with the condos, which they call "structurally deficient," at $150,000 for each condo, but the warranty covers only $50,000.

"Clearly, $50,000 is inadequate," said Karen Somerville, president of a national consumer group called Canadians for Properly Built Homes. "It is a sad situation. We certainly feel for those home purchasers."

The Riverside Glen condo owners are currently suing the builder, Legacy Homes, and other parties involved in the construction of the 20-unit bungalow condominiums on Augier Avenue.

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The condominium owners at Riverside Glen estimate costs to repair construction defects at $150,000 for each condo, but the warranty covers only $50,000. (CBC)

The condo project has a number of outstanding city orders because the units don't meet code and the builder has not fixed the issues.

Construction on the condos had started around 2011 but in 2013, City of Winnipeg building inspectors found problems and issued orders against the developer to fix 18 of the units.

The city determined the condos didn't comply with the building code and inspection reports noted problems with the foundations, including "weaknesses that could result in structural failure."  

Legacy Homes failed to fix the problems as ordered by the city and was then hit with provincial court fines totalling $4,500 for not fulfilling the orders.

"We have since learned that our homes are structurally deficient and require extensive and costly remediation," the owners said in a statement to CBC last month.

"The numbers which have been presented to us are staggering … The financial stress and the emotional impact this has had on our lives is overwhelming."

The third-party warranty provider, Blanket Home Warranty, said in a statement to CBC News, "Blanket Home Warranty has paid policy limits ($50K per claim) on two structural claims that had occurred in the 450 Augier condominium project."

New home warranty not enough to cover condo repairs2:22

Apart from the two claims paid at $50,000 each, "the reason why Blanket Home Warranty has denied the remaining condominium owners structural claims is due to the fact the board or any unit owner has not brought forth evidence to support their claims," Blanket Home Warranty president Jason Yarmuch said in statement.

"The warranty policy only covers a defect or structural defect if there is physical evidence of a defect or failure in a load bearing component," Yarmuch wrote.

"Just because a defect happens in one location does not mean it will happen in all locations of the home or building. The potential for a defect or structural defect, does not constitute coverage as no failure has actually occurred," the Blanket Home Warranty statement said.

"There is always the potential for a failure in every home/building built, but until the failure occurs there is no defect under the warranty policy." 

'All builders may not be created equally'

The Manitoba government decided years ago that new home warranties offered in the province should be improved to give consumers better protection against construction defects, and also should be made mandatory for all builders.

That idea was backed by the Manitoba Home Builders' Association, whose members are required to offer third-party warranty programs in order to join the association.

"I think a warranty gives the consumer a sense of comfort and assurance because, let's face it, all builders may not be created equally," said MHBA president Mike Moore.

He said making third-party warranties mandatory for all builders, not just MHBA members, creates a level playing field.

The former NDP government passed the New Home Warranty Act, which was supposed to come into effect Jan. 1, 2017, making warranties mandatory for all new homes sold in Manitoba.  

The new law, to be enforced by the province's Consumer Protection Office, will create an online public registry where Manitobans can look up the address of any new home to find information about the builder and warranty coverage.

Last November, the Progressive Conservative government decided to delay implementing the new law until January 2018 — a big disappointment to Canadians for Properly Built Homes, which had made submissions to government on the bill.

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Karen Somerville at Canadians for Properly Built Homes says the $100,000 warranty coverage limit being adopted by the province is not adequate protection for new home buyers. (CBC)

"We just didn't understand how this deferral would be a benefit to consumers, their key stakeholder," said Somerville.

She said during her years of consulting with the government on the warranty issue, she found the process gives priority to builders.

"The Manitoba government seemed to be listening more to builders than to consumers," she said.

A provincial spokesperson said in a statement the reason for the delay was to allow for "completion of hands-on testing and training of the online registry with primary stakeholders, which is a critical component of implementation."

The province said groups such as the Manitoba Home Builders' Association and the Association of Manitoba Municipalities supported the delay because it provided additional time to prepare their systems to use the online registry.

"The [Consumer Protection Office] is confident that the later date will benefit all stakeholders and mitigate any negative impacts to home builders or warranty providers," the province said.

$100,000 coverage in future

The new law will require the warranty coverage to be at least $100,000 per dwelling, an increase from the $50,000 in place for the owners of the Riverside Glen condos.

The province said the $100,000 figure was arrived at after extensive consultation with homeowners, builders, warranty providers and others involved in home construction.

"A hundred thousand dollars is a good figure and it's a marked increase from what it was," said Moore.

"It's inadequate," countered Somerville.

"Where you do have a catastrophic failure, you need to have adequate coverage," she said. "It is important to remember that this is consumer protection legislation."

Mike Moore

'I think a warranty gives the consumer a sense of comfort and assurance because, let’s face it, all builders may not be created equally,' said MHBA president Mike Moore. (CBC)

When it comes to addressing home buyers' concerns, Moore said builders try to resolve problems without the customer having to use the warranty.

"I would say 99.9 per cent of all problems with new homes don't go to the warranty provider. The consumer contacts the builder and the builder resolves the problem. It's only the rare instance where you have to go to the warranty provider," he said.

Legacy Homes, the builder in the Riverside Glen condo development, was not an MHBA member even though the owners had policies with a third-party warranty company.

Somerville said that construction defects are more than just financial problems for homeowners.

"When you have a fundamentally flawed home, and you're fighting with your builder, you're fighting with your municipality, you're fighting with your warranty provider. This takes a tremendous toll on families," she said.

She lived the experience years ago when she and her husband had their own problems with a newly built home. That led to her involvement in Canadians for Properly Built Homes as a way to help consumers across the country.

"Often what happens when you have these serious situations is that homeowners find that they get no enjoyment from the home at all. It's just become a big headache for them that they can't get away from."


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