Constructing an Owner-Built Home
An owner builder is an individual authorized by the Homeowner Protection Office (HPO) to build a new home for their personal use. An owner builder is not required to be licensed by the HPO to build the new home or arrange for third-party home warranty insurance on that home.
As of November 19, 2007, individuals wanting to be an owner builder of a new home are required to obtain an Owner Builder Authorization from the HPO and to pay a fee, prior to commencing construction of that new home. These requirements are in effect for all areas of British Columbia, regardless of whether building permits are required or not and are in keeping with amendments to the Homeowner Protection Act and Regulation.
Owner builders must build or directly manage the construction of their new home themselves. If an owner builder engages a builder, construction manager, project manager, or any third party to perform these functions, both the owner builder and the hired construction manager/builder are committing offence(s) under the Homeowner Protection Act and could face monetary penalties of up to $25,000 and/or prosecution.
Unlike homeowners who hire an HPO Licensed Residential Builder to construct their new home, an owner builder usually does not have home warranty insurance protection to rely on should construction defects occur, nor would any subsequent purchaser. Although an owner builder may be able to look to tradespersons to deal with some problems that occur, it is the owner builder who is ultimately responsible for the overall construction of the home for a period of 10 years.
This is particularly important should an owner builder sell their new home within 10 years of first occupancy. The owner builder must provide a disclosure notice obtained from the HPO to any prospective purchasers. The disclosure notice will inform the purchaser that the home was built by the owner builder and whether or not there is a policy of home warranty insurance in place for the home.
In addition, unless they have arranged for home warranty insurance coverage, owner builders are personally liable for construction defects in the new home during this 10-year period to any and all subsequent purchasers during this same period. The statutory protection provision of the Homeowner Protection Act outlines the specific obligations of the owner builder during this period. These obligations are similar to the protection from defects under a policy of home warranty insurance.
That is, two (2) years against defects in material and labour, five (5) years against defects in the building envelope, and ten (10) years against structural defects. Statutory protection enables subsequent purchasers to take legal action against an owner builder to correct defects as set out in the provision and is a liability that cannot be waived by agreement or contract.