A deficiency and a warranty item are not the same thing, and mixing them up costs money. A deficiency is incomplete or substandard work at close-out: an item on the punch list that was promised but not delivered to standard. A warranty item is work that was finished and accepted, then later failed. Under CCDC 2-2020 and CCA 1-2021 the contractor's warranty runs for one year from Ready-for-Takeover, which is separate from both the provincial limitation period and any new-home warranty program. Keeping deficiencies, warranty and last-minute change orders in their own boxes avoids accounting and lien problems.
The deficiency list (the punch list)
At close-out the consultant or owner walks the job and lists what is incomplete or below standard. Under CCDC 2 (GC 7), if the contractor fails to correct deficiencies after written notice, the owner can instruct correction after a 5-working-day notice and back-charge the cost. Industry guidance is blunt on one point: last-minute change orders are not deficiencies and should not be dumped onto the deficiency list. They are extra work and belong in a change order (see Change Orders and Variations).
Holdback cannot be used to fix deficiencies (while liens are live)
This catches people out. The statutory holdback is held for the benefit of potential lien claimants, not as a deficiency fund. While lien claims are still possible, the owner cannot dip into the statutory holdback to pay someone else to fix deficiencies. Only money held over and above the required holdback can be applied to rectification before the lien period expires. If you want a fund to cover defects, you negotiate a contractual holdback on top of the statutory one.
The seasonal defect problem
Some defects cannot be seen at completion. Grading that will not drain until the spring thaw, exterior caulking or paint applied below freezing that fails at the first freeze-thaw, sod that cannot be judged until the growing season, foundation waterproofing that cannot be tested until the frost leaves: a winter handover hides all of it. The contractual answers are practical:
- A seasonal deficiency schedule: list the items not inspectable until a named season, agree a re-inspection date in writing, and start the warranty clock for those items at re-inspection rather than at Ready-for-Takeover.
- An extra contractual holdback of 5% to 10% against the specific seasonal items, on top of the statutory holdback. Because it is contractual, not statutory, it can be applied to fix those defects without the lien-fund restrictions.
- A photographic or thermal baseline taken before backfill or insulation hides the substrate, especially on the envelope and the foundation.
How warranty links to new-home warranty programs
The one-year CCDC warranty is a contract term. Several provinces also run a separate, mandatory new-home warranty for newly built homes, which is a different and usually longer protection that the homeowner holds against a registered builder. The best-known is Ontario's program for new homes; British Columbia, Alberta and Quebec run their own schemes with their own coverage periods. These programs generally cover new construction rather than ordinary renovations, and the rules differ in every province, so a homeowner asking about new-home warranty coverage should be pointed to their provincial program rather than to your one-year contractual warranty. Confirm what applies before you promise anything.
Common mistakes
- Calling a late change order a deficiency. It is extra work and should be priced as one.
- Assuming you can spend the statutory holdback on repairs. You cannot, while liens remain possible.
- Handing over in winter with no seasonal schedule. The defects you cannot see at handover become the disputes you cannot win.
- Confusing the one-year contractual warranty with the provincial new-home warranty. They are different protections with different durations.
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