Guarantee plan for new residential buildings

The Guarantee Plan for New Residential Buildings differs from the private guarantee plans offered on the market by the nature of the guarantees offered and the mechanisms for asserting its rights. In this regard, the terms and conditions are set out in the the Regulation respecting the guarantee plan for new residential buildings, which is the responsibility of the Régie du Bâtiment du Québec (RBQ). Finally, unlike private guarantee plans, any purchaser of a building covered by this plan automatically benefits from it. As this is a system aimed at the minimum protection of consumers'rights, consumers cannot waive this mandatory guarantee, even if they sign a document to that effect.

Types of buildings covered by the mandatory guarantee plan

The Regulation respecting the guarantee plan for new residential buildings does not cover all types of new residential buildings. The mandatory plan applies only to completely new buildings. The new buildings covered, in the category of buildings held in divided co-ownership, are as follows:

• Detached homes, semi-detached and townhouses;
• Residential towers, up to and including a maximum of four superimposed private portions, excluding (in the calculation of the four portions) the private portions intended for parking or storage.

Buildings with more than four superimposed private portions are therefore not covered by this plan, as are converted buildings. As a result, the apartment in a skyscraper or the loft in a recycled factory does not enjoy this protection.

Contract of guarantee

Upon signing the preliminary contract, the contractor (promoter) must give the buyer a signed copy of the contract of guarantee. This contract includes the provisions of the Regulation respecting the guarantee plan for new residential buildings and describes the details of the protections offered, the complaint procedures and the possible remedies in the event of a problem with the contractor. In particular, it must include the names and addresses of the purchaser and the contractor, the date and address of the place where the contract is signed by the contractor, the description of the building, the contact information of the administrator and the contractor's accreditation  and  licence  numbers. This contract must include the mention “Approuvé par la Régie du bâtiment du Québec", along with the number and the date of the decision of the RBQ.

The coverage

A purchaser in a building covered by the mandatory plan automatically benefits from it. The plan offers to the consumer the protection of its deposits up to the limit of the plan and protection against construction defects.

The extent of these guarantees is set out in the Regulation respecting the guarantee plan for new residential buildings. A guide gives details on the scope of the guarantees put in place by the RBQ.

Essentially, the coverage under these guarantees differs depending on the timing of the claim in relation with the reception of common portions:

• Before acceptance: The compulsory plan offers the partial reimbursement of deposits, if the immovable has not been delivered or if the work has not been completed in a private or common portion. The reimbursement is limited to the maximum amount of the indemnities. Some relocation, moving or storage costs may also be covered.

• At the time of acceptance: At the acceptance of the private portions (by each co-owner) or of the common portions (by the syndicate of co-ownership), the compulsory plan covers defects on workmanshiph and the achievement of the work.
• After acceptance : After acceptance of the private portions (by each co-owner) or of the common portions (by the syndicate of co-ownership), the compulsory plan covers faulty design, construction defect or defects in the ground, for a period of five years after the work is completed. It also covers existing and non-apparent defects at the time of acceptance for a period of one year following acceptance under reserve that they have been denounced in a reasonable delay. The plan also covers the repairs of latent defects for a period of three years after acceptance under reserve that they have been denounced in a reasonable delay. The costs relating to the relocation, removal and storage of the property of the co-owners are also covered, when, during corrective work, the building is no longer fit to live. The rehabilitation of the building and the repair of material damage caused by the corrective work are also covered.

The acceptance of the common portions

For any syndicate of co-ownership, the acceptance of the common portions is day one of the calculation of the delays for most guarantees in the plan. The process of acceptance is carried out by the means of a pre-acceptance inspection, using a pre-established list of the items to be verified, by an architect, an engineer or a professional technologist.

Following the pre-acceptance inspection of the common elements, the building professional completes the  Pre-Acceptance Inspection Form – building held in divided co-ownership – common elements in which he establishes the date of receipt of the common elements and denounces the work to be corrected or completed. This document constitutes the receipt of the common portions and marks the beginning of certain guarantees. However, in the event that the completion concerns major work, there can be no acceptance of the common portions.

We wish to point out that the Regulation respecting the guarantee plan for new residential buildings does not make it mandatory for the contractor to supply, for the purpose of the pre-acceptance inspection, the “as built” plans and specifications of the building. Accordingly, during the pre-acceptance inspection, it will be difficult for the construction professional to make its determinations with a high degree of certainty. However, article 1106.1 of the Civil Code of Quebec, as amended by Bill 16, requires the developer to provide the syndicate, within 30 days after the special meeting, with the plans and specifications relating to the immovable that are available. Without such plans, it can be difficult for a building professional to accurately decide on the condition of the building when conducting this pre-acceptance inspection. For example, how could he say that the construction of the common portions is compliant, if he does not have the plans and specifications of the building as built? In such a case, the inspection would not be complete. The professional mandated to do so could not therefore guarantee the absolute integrity of the inspected building.

Presumed acceptance of common elements

If the syndicate fails to receive the common elements, no later than six (6) months after receipt of the notice of completion of the work, the  By-law  provides that the receipt of the common elements is presumed to have taken place. However, this presumed acceptance may be opposed to the syndicate only when the following four conditions are met:

1. The work on (the common areas) has been completed;
2. The syndicate is formed and is no longer under the control of the contractor;
3. The notice of the end of work sent to the syndicate by the contractor, at the time the syndicate was no longer controlled by the contractor, informed the syndicate of the end of the work and obligations with respect to acceptance;
4. Six months have elapsed since the receipt of the notice by the syndicate and the latter, without reason, did not accept the common portions.

As soon as one of these four conditions is not met, there is no presumed acceptance of the common portions.

 WHAT YOU SHOULD KNOW! The protection offered by the Guarantee plan for new residential buildings insures the completion of the work related to the common portions, under reserve that any defect be denounced by a construction professional in a written document, at the time of the acceptance of the common portions. The necessary steps to make a claim under this guarantee must be carried out by the syndicate of co-owners.

WHAT TO KEEP IN MIND: The Guarantee Plan for New Residential Buildings does not cover buildings of significant size, or buildings where an existing part has been converted into divided co-ownership. To learn more about this plan,consult the explanatory guide produced by the RBQ.

 WARNING! Before signing a preliminary contract and paying down payments, make sure your contractor is accredited with GCR and registers the home to be built.

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