In the world of home construction and real estate, the term “developer” often comes up, but what does it mean exactly? And what are the licensing requirements in British Columbia? Here’s a breakdown to help you navigate the essentials of being a developer, courtesy of Pacific Home Warranty.
What Is a Developer?
A developer is someone who buys land and hires a general contractor to build homes with the intent to sell them. According to BC Housing, a developer is classified as a residential builder that sells their ownership in a new home. They are distinct from a general contractor, who manages the construction itself. The key difference is that a developer does not plan to live in the home but aims to sell it after completion.
For example:
- If you purchase land and hire a licensed general contractor to build homes for sale, you are considered a developer.
- A developer must submit an application to BC Housing for a developer license before the home can be sold as new. This application will also need to include warranty acceptance from a licensed warranty provider like Pacific Home Warranty.
Who Needs to Apply for a Developer License?
A developer license is required for individuals or companies that are building homes to sell but will not live in them. The developer must apply for and obtain the license before the home is listed for sale.
Let’s consider a few examples:
- If you’re a general contractor and a client hires you to build a duplex with the intent to sell it, your client will need to apply for a developer license.
- If you, as a builder, plan to build a home on land owned by a company other than your own, such as a separate entity you control, you’ll need to apply for a developer license in the name of that entity.
Getting Started with a Developer License
Applying for a developer license is a relatively straightforward process. The first step is to contact Pacific Home Warranty. One of their representatives will guide you through the process, collect the necessary information, and help you complete the developer application. Once this is done, Pacific Home Warranty will notify BC Housing of the warranty acceptance.
You will also need to apply to BC Housing as a developer, which is usually a quicker and simpler process compared to general contractor licensing. Processing times typically range from 1–2 weeks. Keep in mind that the license comes with limitations, so it’s important to review the conditions before applying.
Consequences of Not Having a Developer License
Selling a home as new without the required developer license is considered a violation of the Homeowner Protection Act. Failing to comply with these regulations could result in compliance orders or financial penalties.
Do You Need to Renew the Developer License?
Yes, a developer license must be kept active as long as the homes are on the market. Once all homes have been sold, you can choose not to renew the license.
When Does the Warranty Begin?
The home warranty starts only when the first buyer takes possession of the home and the title transfers. It does not begin when the home is handed over to the developer unless the developer occupies or rents the home themselves.
For example:
- If a developer lists a home on January 1st and it doesn’t sell until May 1st, the warranty period begins on May 1st when the first buyer takes possession.
Important Things to Keep in Mind
Builders working with developers should be aware of a few crucial points:
- The warranty start date might be delayed if the home doesn’t sell immediately after it’s handed over to the developer.
- Any construction work done by the developer after taking possession of the home may still fall under the builder’s warranty responsibility.
- The home will be categorized as a speculative home, meaning it was built to sell to the general market rather than a pre-sold custom home built for a specific buyer.
By understanding the roles and requirements of developers and general contractors in BC, you can ensure that your projects meet all legal requirements and are fully protected by warranties. For more information or assistance with the developer license application, contact Pacific Home Warranty or BC Housing today.