Guarantee plan for new residential buildings by Garantie de construction résidentielle (GCR)
A house is an essential part of a family’s living space and it’s where all of life’s moments of a family pass by. A true haven of peace, its acquisition requires some preparation, both financial and administrative. By the same token, measures need to be taken to avoid unpleasant surprises (building imperfections, construction defects, etc.). In Quebec, when a house is new or on a developer’s plan, the guarantee plan issued by Garantie de construction résidentielle (GCR) is the insurance that protects the buyer.
The New Home Guarantee Plan
Created in accordance with the Regulation respecting the guarantee plan for new residential buildings, this plan is the document that protects buyers when they purchase a new property. It should be noted that such a guarantee is transferable, but that it cannot be waived, even by signing a document to that effect. Authorized by the Régie du Bâtiment du Québec (RBQ), the Garantie de Construction Résidentielle (GCR) is the administrator of the gurarantee plan. It is a non-profit, neutral and independent organization that helps to ensure the fulfillment of certain legal and contractual obligations on the part of the developer of new homes and condominiums. Buyers’ interests are thus protected and this protection can last up to five years following the purchase of their home.
The Preliminary Contract
The Civil Code of Quebec requires the signing of a preliminary contract before the purchase of a new home or on a plan by a developer. It is used when the sale includes both the house and the land, and represents a kind of advance in which a person promises to buy a house.
More specifically, the preliminary contract sets out the obligations of the contractor and the purchaser, as well as a set of rules that govern the relationship between them. It is important for the buyer to verify that the home is a new GCR home (i.e. that the contractor with whom they are dealing is accredited under the guarantee plan) before signing the preliminary contract. If not, the contractor can use his own preliminary contract which may not be advantageous to the buyer. Check out these 5 things to know about the preliminary contract so you don’t miss any details.
What types of buildings are covered under this guarantee?
It is important to remember that the guarantee only applies to completely new buildings. However, the guarantee does not apply to all types of residential buildings, only the following categories:
- new residential buildings not held in divided co-ownership: single-family detached, semi-detached or row houses, from duplexes to quintuplexes;
- new residential buildings held in divided co-ownership: in addition to single-family detached, semi-detached or row houses, this also includes high-rise residential buildings with no more than four stacked units. These considerations do not include parking or storage units.
Some types of buildings can benefit from the guarantee under certain conditions. They are:
- self-builds in the case where the house was built in part by a general contractor (or his subcontractors). The guarantee may apply only to the portion built by the licensed contractor;
- pre-fab homes only in the case of turnkey type projects. However, if the sales contract is with the manufacturer of the pre-fab home and the installation contract is with a general contractor, then only the portion with the general contractor is covered by the guarantee plan.
It should be noted that the new condo GCR does not apply to condominium buildings of more than 4 units. Also, the guarantee does not apply if the building or unit is accepted more than 24 months after the work is completed.
The Different Protections Offered by the GCR
The protections are part of the GCR features. Moreover, the guarantee plan protects the buyer’s down payments up to a certain limit and covers visible defects and completion of the work when a new building is accepted, for example. Its scope is set out in the Regulation respecting the guarantee plan for new residential buildings.
Protections Prior to Building Delivery
The guarantee plan provides for completion of the work when the buyer holds title to the property. Also, a partial refund of the deposits paid is provided if the building has not been delivered or if the work has not been completed in a private area or the common areas. These reimbursements include maximum allowances: relocation, moving or storage costs may also be covered.
Coverage After Delivery of the Building
Here, the guarantee plan covers, for five years following completion of the work, the repair of construction or floor defects in buildings. Existing defects that are not apparent at the time of delivery are also covered. They are covered for a period of one year following the reception, provided that they are divulged within a reasonable time. The plan covers hidden defects for a period of three years after final acceptance, provided that they are reported within a reasonable time.
The Importance of Being Informed
Although there are many similarities in the process of a purchase and resale, it is important to educate yourself on aspects specific to the purchase of a new property. There are other elements besides the GCR that are different in a new home transaction. Take the time to consult an expert or to get more information so that everything goes off without a hitch!