How a good warranty makes a world of difference

Contrasting the experiences of American and Ontario homeowners faced with faulty concrete

Hundreds of American homeowners in the State of Connecticut have been desperately looking for some kind of help with their collapsing concrete foundations. For the past several years, they have watched their foundations deteriorate before their eyes, with cracks so wide in some cases that you can slip your hand right through them.

Experts believe the source of the problem is defective concrete, while the concrete supplier claims it is the result of improper installation.

Whatever the reason, the foundations are in such poor condition that they cannot be repaired – they need to be removed and re-poured. The estimated cost to do this ranges between $100,000 and $200,000 per home, money which most of the homeowners do not have.

Since the State of Connecticut does not have a comprehensive new home warranty program, there are a number of different insurance companies involved. Many homeowners have tried to get their individual insurer to pay for the necessary repairs but with little success. As the New York Times recently reported: “Insurers have generally refused to pay for repairs, strictly defining the coverage of collapse by inserting the word ‘abrupt’ in policy language.”

NBC reports that several state agencies and the Governor have tried to work with many of the insurers to create a $52.5 million pool of money that would allow homeowners to deal with their crumbling foundations. In exchange, the insurers are reportedly being assured that they could recover money spent from the foundation pool by raising future insurance rates for all Connecticut homeowners. Nevertheless, some insurers have not yet joined the pool.

In the meantime, some affected homeowners have launched a class action lawsuit against the insurance companies for what they feel is a “concerted scheme” to deny coverage. No one knows how long it will take, or if they will win. What is certain is that their homes continue to fall apart, and their lives continue to be negatively impacted.

Contrast the experience of Connecticut homeowners with some Ontario homeowners who found themselves in a similar situation back in 2003. In the spring of that year, builders began noticing problems with concrete that caused foundations, basement floors, footings, and garages to deteriorate. The problem was traced back to a single concrete provider whose product turned out to be defective.

Getting to the root of the issue

Unable to get any assistance from the concrete provider (who eventually went out of business), builders started to address the problems themselves. Tarion (at the time known as the Ontario New Home Warranty Program) began receiving complaints from homeowners about the progress and the quality of the builder repairs.

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A foundation wall showing evidence of deterioration

Tarion recognized that this was a major issue that demanded a concerted approach, and decided to step in and manage the repair process. Through our analysis, we determined that 104 homes located in Brampton, Vaughan, Markham, Aurora, Richmond Hill, and Toronto were affected by the faulty concrete. We went out and examined all of the homes. What did we find?  Some homes that had repairs done to them were not repaired adequately while others had no repairs done to them at all.

Looking for a solid solution

Tarion wanted to ensure that repairs met relevant building and engineering standards, so we hired a leading engineering company to do the work. We encouraged builders to cover reasonable expenses for homeowners who needed to vacate their homes while repairs were being done, and ensured that homeowners who were not compensated by their builders would receive compensation through the warranty.

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Deteriorating foundations needed to be removed

 

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Installing a new foundation

Tarion provided financial assistance to builders who were at risk financially as a result of the situation, worked closely with municipal building officials, and maintained regular communications with homeowners to keep them up to date on the progress of remedial work.

By the following year, all homes had been repaired. The homeowners affected by it all can think back to 2003 and consider themselves fortunate that they bought their new home in a province that had a single, comprehensive new home warranty program. Judging by the ordeal that homeowners in Connecticut have been facing for a similar problem, things could have been very different.