What REALTORS® Should Actually Know About 1-2-5-10 Coverage on Spec Homes
“It’s covered under warranty.”
That phrase sounds reassuring. It is also one of the most misunderstood statements in new construction.
If you work with spec homes in Alberta, you need to understand how new home warranty actually works. Not at a legal textbook level. Just enough to explain it clearly without overpromising.
Let’s simplify it.
Is the Alberta New Home Warranty Program the Only Option?
No.
In Alberta, new homes with building permits applied for on or after February 1, 2014 must carry mandatory warranty coverage under the New Home Buyer Protection Act.
The Act requires minimum coverage. Builders obtain that coverage through approved warranty providers.
The Alberta New Home Warranty Program is one of the most recognized providers. It is not the only one.
Other warranty companies operate in Alberta as long as their coverage meets or exceeds the provincial minimum standards.
As an agent, what matters most is not the logo on the certificate. It is understanding the coverage structure.
What Does 1-2-5-10 Warranty Coverage Actually Mean?
Alberta’s mandatory warranty follows a 1-2-5-10 structure.
Here is what that means in practical terms.
1 Year – Labour and Materials
Covers defects in workmanship and materials.
This includes issues such as finishing deficiencies that fall outside acceptable construction standards. It does not cover normal settling or cosmetic wear that occurs through regular use.
2 Years – Delivery and Distribution Systems
Covers defects in systems like plumbing, electrical, and heating distribution.
If a system was installed incorrectly or fails due to a defect, this is typically where it falls.
5 Years – Building Envelope
Covers defects in the building envelope.
The building envelope is what keeps the outside out. It includes exterior walls, windows, roofing, and foundation walls that prevent water intrusion.
This coverage focuses on protecting the home from moisture penetration.
10 Years – Major Structural Components
Covers significant structural defects.
This refers to major load-bearing components such as foundations and framing that affect the structural integrity of the home.
It does not mean every crack is structural. It means defects that impact stability or safety.
What New Home Warranty Does Not Cover
This is where expectations matter most.
Warranty is not a maintenance plan. It is not coverage for normal ownership.
It does not cover:
- Normal wear and tear
- Homeowner maintenance items
- Damage caused by neglect
- Landscaping
- Exterior seasonal items that depend on weather
If a furnace filter is not replaced or grading shifts after heavy rainfall, that may not fall under warranty.
Setting this expectation early saves you from difficult conversations later.
How Warranty Claims Work in Alberta
Understanding the process is just as important as understanding the coverage.
Step 1: The Builder Is the First Contact
Buyers should contact the builder first. The builder has the opportunity to assess and correct the issue.
Step 2: Warranty Provider Involvement
If the issue is not resolved, the warranty provider may become involved depending on the circumstances.
Timelines Matter
Each level of coverage has a time limit. Claims reported outside the applicable window may not be covered.
Documentation Matters
Encourage buyers to document concerns with photos and written communication. Clear records make the process smoother.
Some situations fall into grey areas. Construction standards are not always black and white. That is normal.
How to Explain Alberta’s New Home Warranty in 60 Seconds
Here is a simple script you can use:
“In Alberta, new homes come with mandatory warranty coverage under provincial law. You have one year on labour and materials, two years on major systems like plumbing and electrical, five years on the building envelope to protect against water intrusion, and ten years on major structural components. It covers defects, not normal wear or maintenance. If something comes up, the builder is your first call, and the warranty provider steps in if needed.”
Clear. Accurate. No overpromising.
Why This Matters for REALTORS® Working With Spec Homes
Understanding warranty coverage helps you:
- Set realistic expectations
- Avoid overstating protection
- Reduce post-possession misunderstandings
- Represent your client with confidence
Warranty is protection, not perfection.
When buyers understand that distinction, transactions tend to move more smoothly. And your role as a knowledgeable professional becomes very clear.
Homebassador supports licensed Alberta agents by centralizing builder spec inventory and helping you navigate builder processes with clarity. The more informed you are about builder policies, the stronger your representation becomes.