Home Builder Warranty

A builder's warranty is an important part of any new home purchasing decision. What a warranty says and the ability to get warranty work completed should not be overlooked. There are several general types of warranties and each is important to you.

At the most basic level, a home must meet local building code standards. Building code requirements govern home construction. Such rules are largely designed to assure safety and habitability, they do not address workmanship issues (that scratched door...).

Builders often have limited warranty programs and such plans can be valuable. A builder's warranty plan; however, assumes that there is a builder to assist if something goes wrong. This may not be the case if the "builder" is actually a corporation that exists only to construct a single project and then closes. Once the builder closes, where does the home owner turn?

To solve the problem of disappearing builders, many new homes can come with limited warranties from third-party insurers. Under such programs, builders buy coverage and the warranty cost is included within the home's price. If there is a covered defect, the builder must make repairs. If the builder does not or cannot make repairs, then the warranty company does the work.

Third-party plans typically last 10 years. In the first year, there is coverage for workmanship and materials, in the first two years basic systems such as plumbing and electrical work are covered, and for the last eight years, structural items are protected.

In addition to builder warranties, there may be separate warranties for major systems (such as the furnace or air conditioning system) as well as major appliances.

As a consumer, you want to review such warranties with care. If there's a problem, will the builder drop everything and attend to your problem? Or, will you be met with delay and denial?

In looking at warranties, you may want to ask some basic questions:

  • What is covered?
  • How long does coverage continue?
  • What is not covered?
  • How are claims handled?
  • What happens after the builder closes?
  • What have been the experiences of past buyers? (Visit prior projects developed by the builder and speak with owners.)
  • What does the Better Business Bureau have to say about the builder? Remember, a large builder will likely have more complaints than a small one. The number of complaints is not always the important point to watch -- instead, see how complaints are handled.
  • What is the extent of the builder's liability?
  • What happens if you have a dispute? Must you sue, or is there a provision for mediation or binding arbitration?
  • Does the Builder offer any third-party warranties?

Dream big in 2024,

Trey Langford
Founder

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