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7. New Construction

(j) Homeowner Protection Act Matters - View Entire Section

(VI) Home Warranty Insurance on Resale Homes

The Homeowner Protection Act creates certain warranty insurance disclosure requirements for warranty providers, but does not place any requirement on future owners to ensure that they provide details on the home warranty insurance to subsequent buyers.

Home warranty insurance stays with the property. Therefore, if information on the warranty insurance is not provided to a subsequent buyer, it does not mean that a claim cannot be made on the policy.

Subsequent buyers should be provided copies of home warranty insurance documents, including information regarding the expiry dates associated with the policy. Not being aware of the expiry dates could result in missing the opportunity to submit a claim under the policy. If such documents have not been provided to a buyer at the time an offer is being written, the Contract of Purchase and Sale should include a clause that makes the contract conditional on the seller providing home warranty insurance documents to the buyer, and the buyer having an opportunity to review and accept the policy. While the buyer will not be able to change the level of coverage provided under warranty, he or she may be concerned about the length of the remaining term of the policy. Wording such as the following should be used in these circumstances.

Receipt of Home Warranty Insurance Documents Clause

Subject to the Seller providing to the Buyer a copy of the home warranty insurance policy, and the Buyer being satisfied as to this policy, on or before (date) .

This condition is for the sole benefit of the Buyer.

Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal