Buying a new home is one of the largest purchases you’ll ever make, so you’ll want to make sure you’re protected if something goes wrong. New home warranty protection is supposed to do that, but regulators have discovered that’s not always happening.

You don’t have to explain that to Carrie Kormish. She and her husband recently bought a new home in the Chilliwack area but six months after moving in, they discovered mould in the crawl space.

"I had to leave the home for two months because I was very ill from the mould," said Kormish.

Mould experts confirmed significant amounts of mould present with a high potential for health issues.

The wood was found to be wet and mouldy and it was wet behind the insulation in the crawl space. The problem was reported to the builder and the home warranty company. It took a month before an inspector for the warranty company came out, finding defects with the insulation, but in February, the homeowner said nothing had been done about the mould.

“Warranty has been useless to us so far," said Kormish.

"It's not fair treatment of consumers to have a claim being indefinitely delayed and you're still living with your defect. That can be devastating for a homeowner," said Chris Carter with the Financial Institutions Commission which regulates home warranty companies.

The B.C. Financial Institutions recently conducted an audit of one of the major new home warranty providers and found several problems related to claims processing including, not handling claims in a timely manner, not ensuring sufficient oversight of warranty claims and not keep proper records. That company agreed to do better but the entire industry has been put on notice.

"We're watching and we'll take action when we need to," said Carter.

Typically, a builder is given 30 days to correct a known warrantable defect. If not corrected regulators expect the warranty company to step in. And BC Housing says consequential damage from defects, like mould, could be covered unless excluded in the policy.

It didn’t appear to be excluded in Kormish’s new home warranty policy, but no one could agree on what caused the mould. The builder blamed the homeowners for turning off a ventilation fan, the Kormishes believe the house was still wet from rains when the insulation was installed, and the warranty company said it could have been caused by a number of factors including warrantable defects.

The Kormish’s got tired of waiting and took matters into their own hands, ripping out the insulation, waiting for everything to dry out, remediating the mould and then applying new foam insulation.

“We've spent over $7,000 in bills to get the mould and the wet wood under control," said Kormish.

After CTV News Vancouver got involved the warranty company agreed to settle with the homeowner and to resolve their outstanding issues and expenses. It has also committed to further investigate the envelope of the house.

Kormish is relieved and how does she feel about her new home now?

“I could have loved it, if we wouldn't have had some issues," she said.

As for the builder, he left CTV News Vancouver a voice mail message where he continued to blame the homeowners for the mould. We were told to contact his lawyer. We left the builder another message, sent an email and called the lawyer. We got no further response. 

To check whether your home is registered for new home warranty click here.

To check whether your builder is registered as a licenced home builder click here.