Owner Built Homes
2007/08/07 Originally published in the Vernon Morning Star.
As of July 1, 1999 The Homeowner Protection Act came into effect. This act allows people to build their own homes or manage the building of their own homes without providing third party Warranty Insurance. However, to meet the legal requirements an owner-builder must "be an individual who builds a detached, self-contained dwelling for their own personal use not more than once every 18 months." The 18 months begins after the completion of construction and once the homeowner actually begins their personal use. i.e. living in the home.
As a result of not being required to provide the third party Home Warranty Insurance, owner-builders are personally liable to buyers of their home for a full 10 years after the owner-builders first occupancy. Buyers need to be cautious and aware that the owner-builders warranty is only as good as the owner-builders financial capability and/or their ability to repair the defects in the home.
When considering buying such a home, a prudent buyer would be well advised to have a competent, certified home inspection from a registered home inspector as a minimum level of investigation of the home. Buyers should check the home out further by establishing that a final occupancy certificate exists for the home. Anything a buyer can do to investigate the home so that they know what they are buying is advisable.
When an owner-builder is seeking a building permit, or wants to start building in an area where building permits are not a requirement, the owner-builder must apply to the Homeowner Protection Office for an owner-builder exemption. Once approved, the HPO will issue an Owner-Builder Declaration and Disclosure Notice. For the first ten year period any buyer of an Owner-Builder home must be provided a copy of the Owner-Builder Declaration and Disclosure from the owner-buyer. It shows that there is no third party Warranty Insurance.
If the home was built by an owner who has not met the legal requirements of the owner-builder exemption, then the home is seen to be illegally constructed, and when sold the HPO sees it as an illegal sale. If the owner builder is fraudulent they can face large fines and criminal records. So, it is very important if you want to be an owner-builder, that you do in fact personally use the new home for the required period of time before offering your home for sale.
Whether you are a buyer of an owner-built home or an owner-builder, get legal advice when buying, building or selling such a home.
A website with more details than I can provide in this column is www.hpo.bc.ca
Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email her or call 503-3755.
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