What Is a Deficiency Walk-Through When Buying a New Home?
When buying a newly built home in North or West Vancouver — whether it's a custom home, a spec build, or a smaller infill development—one of the most important steps before closing is the deficiency walk-through.
This is your opportunity to go through the home with the builder, identify any incomplete or imperfect work, and ensure there's a clear plan in place to have it resolved.
Unlike resale purchases, where you’re buying a home as viewed, new construction is expected to meet a certain standard. But even with a reputable builder, small issues can arise. Paint touch-ups, missing hardware, sticky doors, or appliance malfunctions—these are all common examples of deficiencies that may be discovered just before possession.
Disclaimer: The information provided here is for general guidance only and does not constitute professional or legal advice.
Why Include a Deficiency Walk-Through in the Contract?
Most buyers of newly built homes will want to include a contractual clause that provides for a pre-closing inspection, a documented deficiency list, and—crucially—a holdback for anything left incomplete. This protects you from being left to chase a builder after closing with no leverage.
Here’s what a typical clause might look like:
The Buyer and a representative of the Seller will jointly conduct a walk-through inspection of the Property no later than (number of days) days before the Completion Date.
Upon completion of that inspection, the Buyer and the Seller will complete a mutually agreed deficiency list (“Deficiency List”) detailing all items that are to be remedied by the Seller (each, a “Deficiency”) and a value for each Deficiency to be remedied. The Buyer and the Seller will sign and date the Deficiency List which will then form part of this Contract.
The quality of work and materials used by the Seller to correct the Deficiencies will be equal to or better than that of the surrounding construction.
The Seller will use all commercially reasonable efforts to remedy the Deficiencies before the Completion Date and will provide the Buyer with written confirmation that all Deficiencies have been remedied.
If, despite exercising commercially reasonable efforts, the Seller has not remedied or will not be able to remedy the Deficiencies (number of days) days prior to the Completion Date, the Seller or the Seller’s Conveyancer will immediately notify the Buyer and the Buyer’s Conveyancer of this fact. The Buyer’s Conveyancer will then hold back from the sale proceeds in its trust account an amount equal to the total value of the unremedied Deficiencies (the “Deficiencies Holdback”).
If there are unremedied Deficiencies as of the Completion Date, and the required notice, as provided for above, has been given to the Buyer and the Buyer’s Conveyancer, the Seller will nevertheless remedy all unremedied Deficiencies by (number of days) days after the Completion Date (the “Deficiency Remedy Date”). After the Completion Date, upon the Seller’s written request, the Buyer will provide the Seller with reasonable access to the Property to enable the Seller to remedy the Deficiencies.
If all of the Deficiencies are remedied by the Seller on or before the Deficiency Remedy Date, the Buyer will instruct the Buyer’s Conveyancer to immediately release to the Seller the Deficiencies Holdback.
If all of the Deficiencies are not remedied by the Deficiency Remedy Date, the Buyer will instruct the Buyer’s Conveyancer to only release from the Deficiencies Holdback the total value of the Deficiencies that have been remedied. In this case, the Buyer may either:
- agree to extend the Deficiency Remedy Date; or
- instruct the Buyer’s Conveyancer to release the balance of the Deficiencies Holdback to the Buyer for the purposes of correcting the unremedied Deficiencies without the involvement of the Seller and without limiting any other rights or remedies that the Buyer may have against the Seller.
Any dispute concerning the items and values in the Deficiency List, the remedy of the Deficiencies, and the release of funds from the Deficiency Holdback will be settled by a single arbitrator under the Arbitration Act, with the costs of arbitration being shared equally by the parties.
Sample Clause (Explained)
“The Buyer and a representative of the Seller will jointly conduct a walk-through inspection of the Property no later than (X days) before the Completion Date...”
This sets a timeline for when the inspection must take place, usually a few days to a week before closing.
“...Upon completion of that inspection, the Buyer and the Seller will complete a mutually agreed deficiency list...”
Both parties review the home together and agree on any outstanding items. This list is signed and becomes part of the contract.
“...The Seller will use all commercially reasonable efforts to remedy the Deficiencies before the Completion Date...”
The goal is to fix as much as possible before you take possession. But sometimes, items need more time.
“...If not completed, the Buyer’s Conveyancer will hold back funds equal to the value of the unremedied Deficiencies...”
This gives the builder financial motivation to complete the work promptly after closing.
“...If Deficiencies are not remedied by the agreed remedy date, the Buyer may either extend the timeline or use the funds to complete the work themselves.”
This provides a clear and enforceable mechanism to protect your interests if the builder doesn’t follow through.
“...Any disputes will be settled by arbitration.”
This offers a structured way to resolve disagreements, without immediately going to court.
How This Differs From Larger Presale Developments
If you’re buying a presale condo or townhome in a larger development, the process is very different. These contracts (written by the developer) typically:
- Do include a deficiency walk-through prior to possession
- But do not allow for holdbacks or contract amendments
- And often provide limited negotiation options
Interested in learning more about presales? Our team would be pleased to discuss.
What About New Home Warranty?
Even if your contract includes a deficiency clause and holdback, your new home is still protected under the 2-5-10 New Home Warranty Program in B.C.
This includes:
- 1 year coverage on labour and materials (workmanship defects)
- 2 years on major systems (electrical, plumbing, HVAC)
- 5 years on building envelope
- 10 years on structural defects
The 1-year workmanship coverage is especially important. If something arises after possession—whether or not it was caught during your deficiency walk-through—you may still have recourse through the builder and warranty provider.
Final Tips for Buyers
- Plan ahead: Pool, landscaping, or specialty installations may not be ready by completion—discuss this upfront with your Realtor.
- Leave time: Booking a deficiency walk-through can take coordination. Make sure you build in time before the closing date.
- Bring support: If possible, have your agent, inspector, or even a construction-savvy friend attend the walk-through.
- Document everything: Photos and written notes help avoid disagreements later.
Thinking About Buying a New Home?
We regularly help clients navigate new home purchases across North and West Vancouver, and we know what to watch for in these transactions.
From writing a strong deficiency clause to managing timelines and inspections, we’re here to make sure you move in with peace of mind—not a punch list.
Looking at new builds on the North Shore? Let’s talk about what to expect—and how to protect your interests.