Protect you and your new build with FCT’s newest endorsement
Jul 3rd, 2015 | By John Tracy
Buying a new build home certainly has some advantages over buying a resale home: you are able to choose the latest and greatest designs, as well as give it your own personal touch by choosing finishes, features and colours prior to construction. In many cases, when you purchase a newly built home you are backed by a warranty , and chances are that it will be a long time before you have to live through the stress of a major renovation.
On the other hand, buying a newly built home can have its disadvantages; not the least of which is the perpetual mud and dust that goes along with living in a construction site. FCT can’t do anything about the mud and dust, but we have taken an innovative approach to helping buyers of new homes by being the first title insurer to introduce an endorsement specifically addressing a major problem inherent to the purchase of a new home — construction delays.
We all know that construction projects do not always finish on time or as planned. Depending upon the time of year, some items in a new home may remain unfinished as of the closing date yet buyers are still obligated to close the transaction… Things like decks, air condition systems and paving are all seasonal dependent and may remain incomplete until weather permits several months after closing.
On May 25, 2015, FCT was proud to introduce the Post Policy Construction Endorsement for New Homes nationwide (excluding Quebec). This endorsement advances the policy date of title insurance policies for new homes for one year for 14 of the covered title risks contained in the policy. Although FCT’s title insurance policy contains several areas of post-policy date coverage (for example losses arising from forgery or impersonation) and the general rule is that if it happens after the date of policy, it is excluded from coverage. However, with this new endorsement coverage, the following is extended for one year after the closing date:
- Work orders;
- Zoning by-law violations; and
- Items constructed without a permit (amongst other things).
The extended coverage applies to improvements that were contracted for with the vendor prior to the closing date, but not completed at that time.
It is important to note that the new coverage is not a warranty or coverage that incomplete items will be completed and is probably best illustrated by the following example:
Sally and Bill Smith purchased a newly constructed home and closed the transaction in January. The Agreement of Purchase and Sale included a provision whereby the builder would install an air conditioner after the snow had melted and the weather permitted a proper installation. The air conditioner was installed pursuant to the Agreement in April. Unfortunately for Bill and Sally, their neighbour did not like where the air conditioner was located and thought it was too close to the property line, so he called the municipality to complain. The municipality attended the property to investigate and discovered that the air conditioner did in fact encroach into the setbacks in the zoning bylaw and ordered Bill and Sally to remove it. Without the Post Policy Construction Endorsement for New Homes there would have been no coverage because the air conditioner did not exist on the policy date. Instead the costs to relocate the air conditioner to the back of the dwelling where it would not violate the zoning bylaw were covered under the policy and Sally and Bill were able to enjoy their new home in air-conditioned comfort!
For more information on the coverage FCT provides to new homebuyers, please contact your Business Development Manager or call 1.866.804.3122 for more information.