So, two weeks and many phone calls later, we still don't have the new home warranty, and we haven't applied for an exemption yet.
First problem, access to the government website where we apply for the exemption or register the warranty. Still don't have it. After a week, I called the 800 number, and they submitted the request again. Of course, this was after assuring them several times that the response was NOT in my junk folder. This time, she promised 3 days, max. So, 3 days later (subtracting weekends and Canada Day) I called again. I got the same person again, Deanne. She said that since it hadn't been a *full* 3 business days yet, it technically wasn't a problem, and she refused to escalate it. Apparently you don't count the day you request, and they have until 4pm on the 3rd day, so she was confident it would show up in the next 2 hours. But just in case, she submitted it again. And just in case, I submitted it again from my other email account, AND I submitted a request with MrDinks' information. We have to wait another few days before attempting to escalate it again. But I think it's fairly obvious their process is broken. We've now got 5 requests in that have slipped through the cracks. If it's automated, is the automated process even running? If it's a guy entering in the requests manually, has he been showing up for work? I'm skeptical that the issue is too many owner builders trying to register their warranties that he's simply overwhelmed. Other aspects of this issue are telling me we are the first owner builders to attempt to build a house in Alberta since this law was enacted.
As I mentioned earlier, the first company I talked to simply doesn't deal with owner builders. One of the 3 companies who I left voicemails for returned my call 3 days later and informed me that they don't deal with owner builders. The other 2 completely ignored my call. So that leaves Progressive Home Warranty as the only company that will sell a "warranty" to an owner builder. However, their program is written for builders, and we have to follow the process for builders.
This is how it works. For the first 2 years from the time we move into the house, the builder (us) is responsible for any issues. If the homeowner (us) reports an issue to the builder (us) and the builder (us) refuses to fix it, the homeowner (us) can report it to the warranty program who will act as a mediator between the builder (us) and the homeowner (us). If they agree with the homeowner (us), and the builder (us) still refuses to fix it, then Progressive has it fixed and takes it out of the $10k security deposit we provided. If the fix exceeds the $10k, they bill the builder (us). In case you haven't noticed the issue here, if we complain to them about an issue that we refuse to fix, they'll use our money to fix it on our behalf and bill us for the remainder. I can absolutely, 100% guarantee this will never happen. But nobody believes me. Well, maybe they do, but this is the process. They don't have a process for people building for themselves. They believe they are doing me a favour letting me give them $14k. I'm not sure if that applies to Builder Me, or Homeowner Me. But they're doing one of us a favour.
They're actually operating on the assumption that despite our protests, we're really building this house to sell. Because, in their opinion (and evidently the opinion of the other 4 companies who won't even talk to us), if we were really building it to live in, we'd get the exemption.
Assuming we weren't our own builder, would this be a worthwhile program? Not likely. In the event of the mediation, if they see a clear fault on the part of the builder, they cover it and charge the builder. But, they have a long term relationship with the builder. How often are they going to side with the homeowner? The majority of the time, they step back and suggest the builder and homeowner go to court. Well, that was $14k well spent! And the $14k is ALWAYS paid by the homeowner. The difference between new house buyers and owner builders is that owner builders pay it directly. New house buyers pay it as part of the cost of the build. It might be a little less for a buyer, since the security deposit comes back to the builder (or gets spread over multiple houses). But they are still going to pay the costs of fronting the security deposit.
After 2 years, up to 10 years, it becomes an insurance policy on the structure and exterior envelope. So we get "something" out of it.
Another issue I have with this program is that we have to agree to random inspections, and ANYTHING they don't like, for any reason, at any time, we have to change. We're already required to do city inspections, which we're paying for, (we pay a 3rd party engineer to inspect, and then we pay the city to read the engineer's report) and now we're paying again for a more thorough, random, and even more binding inspection. If the Progressive inspector wants something changed, not only do we have to pay to change it, but we have to pay him another $250 to come back and re-inspect it. And, I suspect that we may need to pay the engineer to re-inspect it, too. At least the city inspector has clear guidelines to follow, and even then there's often calls made at their own discretion, but it's predictable based on experience of the trades. The city inspector doesn't have carte blanche to stop the build if he thinks the windows should be 6" bigger than the plans called for. The Progressive account rep assures me it's just anything that doesn't meet code, or isn't, in their opinion, "quality". She doesn't understand the concept that "quality" is subjective. Besides, the contract is written such that ANYTHING may need to be changed. If they are just concerned that we're building to code or better, then put that in the contract. Don't word the contract such that absolutely anything, at any random time, at their sole discretion, must be changed at our expense. But it's worded like that because they want the freedom to force the builder (us) to make changes they feel the homeowner (still us) would want.
To me, that's just too much of a risk. The odds that a person we give free reign is going to impede our build somewhere along the way just to justify his existence? That seems extremely likely. It's a bigger risk than the possibility that someday, we might want to sell and will not be able to buy this coverage retroactively. So, we're going for the exemption. As soon as we get access to apply for it. Wait, how does this affect our mortgage? Better call the bank.
First person I talked to at the bank, our designated contact for our land mortgage, was comically clueless. She told me that the bank would require us to get the warranty because they believed that by qualifying for the warranty, it somehow assured the bank that we are qualified to build a house. No, it means we are qualified to write a check for $14k. Eventually, she confessed that she hasn't setup a build mortgage in years, and never for this bank. Better talk to someone who can at least sound like she knows what she's talking about. The second person stated that the bank requires the warranty because the house can't be sold for 10 years. If they put a mortgage on the property, and we default, they can't sell the property either. So they don't want to loan money against it. That's a really weird (and unlikely?) part of the law, but it's the same thing that the city employee told Ryan, and what the first provincial employee told me.
I then asked Progressive about buying the "warranty" later, if we decide to sell. If that's a possibility, then the bank shouldn't have an issue, right? Well, Progressive has never been asked to sell that, so they won't promise they ever will. And it would be a risk to them to offer a warranty or insurance on work they weren't allowed to inspect during the build. So the cost of the "warranty" would go up to reflect that risk, if they would even offer it at all. I guess we're back to getting the warranty upfront.
Now, to figure out how to provide the security deposit. We can hand this random company $10k and hope they are still around in 3 years (assuming it takes a year to build the house, HA!) and can be convinced to give it back without interest. Or we can set up a letter of credit through a bank. The first thing I've learned about a "Letter of Credit", is that "credit" is not the kind where the bank loans you money. It's the kind of "credit" that means there's a balance in your account. So instead of a letter assuring someone that the bank will give us money if we need it, it's a letter telling them we've set aside money and the bank will give it to them whenever they ask for it. And despite the fact that it will never be drawn on as long as we own this house, the bank will not issue the letter without us setting aside the money. Yet another group of people who can't seem to believe we would never make a claim against ourselves and then refuse to act on it.
Hmm, can I claim against warranty if MrDinks isn't completing the honey-do list? Yeah, probably not.
The second thing I've learned about a letter of credit is that they cost a lot of money to set up, and possibly take a lot of time. So even if we can get an account with 1% interest, the letter of credit will still cost us about $400 over 3 years. And it might take the bank a month to figure out how to create an account for us, and write a letter.
The third thing I've learned about letters of credit is that they don't typically issue them to individuals. The builder is supposed to have set up a company. What about if the builder is the homeowner? You're supposed to get the exemption. Are you dizzy yet?
I finally found the actual text of this law online. Like most laws, it's confusing. I can see how people are interpreting it as "the house can't be sold for 10 years." But I can also see how there was an intent to allow people to get the exemption, and if so, then they need to disclose the lack of warranty to a potential buyer. So, now we hire a lawyer?
But, it doesn't matter how *I* interpret the law. If the bank won't give us a mortgage, we're stuck. We can come up with the money to build without a build mortgage. But, we'll probably want to get a line of credit on it at some point. If we can't get a build mortgage, we can't get a HELOC, right? At the start of this, I was under the impression that only one bank would give us a build mortgage. There was only one bank willing to give us a mortgage on bare land. So it would stand to reason they'd be the only ones willing to mortgage a build, right? Actually, no. Apparently once you have land, they all want in on the build financing. So now I have messages in to 2 mortgage brokers to find out if any of them have interpreted the law in our favour.
And in the midst of all this, I'm stuck between this poorly planned law and MrDinks. I'm the one calling and talking to these people, and reading the rules. So he's frustrated with the law, and only has me to yell at. Our first home building marriage arguments. Thank-you, Alberta!
And for icing on the cake, we got a letter from the city today threatening to fine us if we don't do something about the weeds on the lot immediately. Well, within 7 days. From the date of the letter sent a week ago. You know what our plan for the weeds was? We were supposed to dig a freaking hole! We were supposed to be digging and driving huge trucks over the dirt so weeds wouldn't have a chance to grow. We've been going over regularly and mowing the boulevard and spraying the bad weeds, but that's apparently not enough. Apparently one of the neighbours complained about the eyesore of an empty lot. And the city can't make a connection between their own roadblocks and the fact that there's an empty lot. Different departments, you know. (Even though the law causing the current problem is provincial, it specifically says we need the warranty before the city can ISSUE the building permit. We could theoretically be letting the city go over our building plans while we wait on the exemption or the letter of credit. But the city is adding their own level of ridiculousness to this by not allowing us to APPLY for the building permit until the warranty is sorted out.)
So, right now, I'm ready to throw in the towel. Arguing with MrDinks, giving more money to all the governments, so we can live next to assholes who make bylaw complaints? Anyone want to buy some dirt?
First problem, access to the government website where we apply for the exemption or register the warranty. Still don't have it. After a week, I called the 800 number, and they submitted the request again. Of course, this was after assuring them several times that the response was NOT in my junk folder. This time, she promised 3 days, max. So, 3 days later (subtracting weekends and Canada Day) I called again. I got the same person again, Deanne. She said that since it hadn't been a *full* 3 business days yet, it technically wasn't a problem, and she refused to escalate it. Apparently you don't count the day you request, and they have until 4pm on the 3rd day, so she was confident it would show up in the next 2 hours. But just in case, she submitted it again. And just in case, I submitted it again from my other email account, AND I submitted a request with MrDinks' information. We have to wait another few days before attempting to escalate it again. But I think it's fairly obvious their process is broken. We've now got 5 requests in that have slipped through the cracks. If it's automated, is the automated process even running? If it's a guy entering in the requests manually, has he been showing up for work? I'm skeptical that the issue is too many owner builders trying to register their warranties that he's simply overwhelmed. Other aspects of this issue are telling me we are the first owner builders to attempt to build a house in Alberta since this law was enacted.
As I mentioned earlier, the first company I talked to simply doesn't deal with owner builders. One of the 3 companies who I left voicemails for returned my call 3 days later and informed me that they don't deal with owner builders. The other 2 completely ignored my call. So that leaves Progressive Home Warranty as the only company that will sell a "warranty" to an owner builder. However, their program is written for builders, and we have to follow the process for builders.
This is how it works. For the first 2 years from the time we move into the house, the builder (us) is responsible for any issues. If the homeowner (us) reports an issue to the builder (us) and the builder (us) refuses to fix it, the homeowner (us) can report it to the warranty program who will act as a mediator between the builder (us) and the homeowner (us). If they agree with the homeowner (us), and the builder (us) still refuses to fix it, then Progressive has it fixed and takes it out of the $10k security deposit we provided. If the fix exceeds the $10k, they bill the builder (us). In case you haven't noticed the issue here, if we complain to them about an issue that we refuse to fix, they'll use our money to fix it on our behalf and bill us for the remainder. I can absolutely, 100% guarantee this will never happen. But nobody believes me. Well, maybe they do, but this is the process. They don't have a process for people building for themselves. They believe they are doing me a favour letting me give them $14k. I'm not sure if that applies to Builder Me, or Homeowner Me. But they're doing one of us a favour.
They're actually operating on the assumption that despite our protests, we're really building this house to sell. Because, in their opinion (and evidently the opinion of the other 4 companies who won't even talk to us), if we were really building it to live in, we'd get the exemption.
Assuming we weren't our own builder, would this be a worthwhile program? Not likely. In the event of the mediation, if they see a clear fault on the part of the builder, they cover it and charge the builder. But, they have a long term relationship with the builder. How often are they going to side with the homeowner? The majority of the time, they step back and suggest the builder and homeowner go to court. Well, that was $14k well spent! And the $14k is ALWAYS paid by the homeowner. The difference between new house buyers and owner builders is that owner builders pay it directly. New house buyers pay it as part of the cost of the build. It might be a little less for a buyer, since the security deposit comes back to the builder (or gets spread over multiple houses). But they are still going to pay the costs of fronting the security deposit.
After 2 years, up to 10 years, it becomes an insurance policy on the structure and exterior envelope. So we get "something" out of it.
Another issue I have with this program is that we have to agree to random inspections, and ANYTHING they don't like, for any reason, at any time, we have to change. We're already required to do city inspections, which we're paying for, (we pay a 3rd party engineer to inspect, and then we pay the city to read the engineer's report) and now we're paying again for a more thorough, random, and even more binding inspection. If the Progressive inspector wants something changed, not only do we have to pay to change it, but we have to pay him another $250 to come back and re-inspect it. And, I suspect that we may need to pay the engineer to re-inspect it, too. At least the city inspector has clear guidelines to follow, and even then there's often calls made at their own discretion, but it's predictable based on experience of the trades. The city inspector doesn't have carte blanche to stop the build if he thinks the windows should be 6" bigger than the plans called for. The Progressive account rep assures me it's just anything that doesn't meet code, or isn't, in their opinion, "quality". She doesn't understand the concept that "quality" is subjective. Besides, the contract is written such that ANYTHING may need to be changed. If they are just concerned that we're building to code or better, then put that in the contract. Don't word the contract such that absolutely anything, at any random time, at their sole discretion, must be changed at our expense. But it's worded like that because they want the freedom to force the builder (us) to make changes they feel the homeowner (still us) would want.
To me, that's just too much of a risk. The odds that a person we give free reign is going to impede our build somewhere along the way just to justify his existence? That seems extremely likely. It's a bigger risk than the possibility that someday, we might want to sell and will not be able to buy this coverage retroactively. So, we're going for the exemption. As soon as we get access to apply for it. Wait, how does this affect our mortgage? Better call the bank.
First person I talked to at the bank, our designated contact for our land mortgage, was comically clueless. She told me that the bank would require us to get the warranty because they believed that by qualifying for the warranty, it somehow assured the bank that we are qualified to build a house. No, it means we are qualified to write a check for $14k. Eventually, she confessed that she hasn't setup a build mortgage in years, and never for this bank. Better talk to someone who can at least sound like she knows what she's talking about. The second person stated that the bank requires the warranty because the house can't be sold for 10 years. If they put a mortgage on the property, and we default, they can't sell the property either. So they don't want to loan money against it. That's a really weird (and unlikely?) part of the law, but it's the same thing that the city employee told Ryan, and what the first provincial employee told me.
I then asked Progressive about buying the "warranty" later, if we decide to sell. If that's a possibility, then the bank shouldn't have an issue, right? Well, Progressive has never been asked to sell that, so they won't promise they ever will. And it would be a risk to them to offer a warranty or insurance on work they weren't allowed to inspect during the build. So the cost of the "warranty" would go up to reflect that risk, if they would even offer it at all. I guess we're back to getting the warranty upfront.
Now, to figure out how to provide the security deposit. We can hand this random company $10k and hope they are still around in 3 years (assuming it takes a year to build the house, HA!) and can be convinced to give it back without interest. Or we can set up a letter of credit through a bank. The first thing I've learned about a "Letter of Credit", is that "credit" is not the kind where the bank loans you money. It's the kind of "credit" that means there's a balance in your account. So instead of a letter assuring someone that the bank will give us money if we need it, it's a letter telling them we've set aside money and the bank will give it to them whenever they ask for it. And despite the fact that it will never be drawn on as long as we own this house, the bank will not issue the letter without us setting aside the money. Yet another group of people who can't seem to believe we would never make a claim against ourselves and then refuse to act on it.
Hmm, can I claim against warranty if MrDinks isn't completing the honey-do list? Yeah, probably not.
The second thing I've learned about a letter of credit is that they cost a lot of money to set up, and possibly take a lot of time. So even if we can get an account with 1% interest, the letter of credit will still cost us about $400 over 3 years. And it might take the bank a month to figure out how to create an account for us, and write a letter.
The third thing I've learned about letters of credit is that they don't typically issue them to individuals. The builder is supposed to have set up a company. What about if the builder is the homeowner? You're supposed to get the exemption. Are you dizzy yet?
I finally found the actual text of this law online. Like most laws, it's confusing. I can see how people are interpreting it as "the house can't be sold for 10 years." But I can also see how there was an intent to allow people to get the exemption, and if so, then they need to disclose the lack of warranty to a potential buyer. So, now we hire a lawyer?
But, it doesn't matter how *I* interpret the law. If the bank won't give us a mortgage, we're stuck. We can come up with the money to build without a build mortgage. But, we'll probably want to get a line of credit on it at some point. If we can't get a build mortgage, we can't get a HELOC, right? At the start of this, I was under the impression that only one bank would give us a build mortgage. There was only one bank willing to give us a mortgage on bare land. So it would stand to reason they'd be the only ones willing to mortgage a build, right? Actually, no. Apparently once you have land, they all want in on the build financing. So now I have messages in to 2 mortgage brokers to find out if any of them have interpreted the law in our favour.
And in the midst of all this, I'm stuck between this poorly planned law and MrDinks. I'm the one calling and talking to these people, and reading the rules. So he's frustrated with the law, and only has me to yell at. Our first home building marriage arguments. Thank-you, Alberta!
And for icing on the cake, we got a letter from the city today threatening to fine us if we don't do something about the weeds on the lot immediately. Well, within 7 days. From the date of the letter sent a week ago. You know what our plan for the weeds was? We were supposed to dig a freaking hole! We were supposed to be digging and driving huge trucks over the dirt so weeds wouldn't have a chance to grow. We've been going over regularly and mowing the boulevard and spraying the bad weeds, but that's apparently not enough. Apparently one of the neighbours complained about the eyesore of an empty lot. And the city can't make a connection between their own roadblocks and the fact that there's an empty lot. Different departments, you know. (Even though the law causing the current problem is provincial, it specifically says we need the warranty before the city can ISSUE the building permit. We could theoretically be letting the city go over our building plans while we wait on the exemption or the letter of credit. But the city is adding their own level of ridiculousness to this by not allowing us to APPLY for the building permit until the warranty is sorted out.)
So, right now, I'm ready to throw in the towel. Arguing with MrDinks, giving more money to all the governments, so we can live next to assholes who make bylaw complaints? Anyone want to buy some dirt?
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