What’s Covered by a Builder Warranty?

Written by Ashley Sutphin Posted On Wednesday, 24 February 2021 00:00

When you buy a new home, you may have some level of coverage if something goes wrong. Some home warranties are backed by a builder. In other cases, the builder might purchase the warranty from a third-party company. Additionally, some homeowners will buy warranty coverage from a third-party as a supplement to whatever’s provided by their builder.

Many home builders include a warranty on their work into the sales contract, or they might make it a separate document.

If you do get a warranty, you need to go over it to make sure you’re clear on how long the coverage period is and what you should do if you experience a problem. You need to look carefully at what is outlined as your responsibilities too—for example, there may be a list of maintenance requirements that you have to keep up with. If you don’t, your warranty might be void.

The Department of Veterans Affairs and the Federal Housing Authority require builders have a third-party warranty for new homes with VA or FHA loans. Having a builder warranty is sometimes what compels people to opt for new construction versus buying a newer home, but you have to read the fine print on the coverage.

What’s Covered?

A warranty for a new house is usually pretty limited in its scope of coverage. Warranties define coverage for workmanship and materials related to different parts of a home like the heating, air conditioning, and electrical systems. Most warranties also dictate how repairs are to be made.

New homeowners often think that once the home passes inspection, that means everything is good to go. There can be a number of problems that arise in new homes, often related to defective materials, landscaping issues, and cracking of the drywall because of settling.

It can be tough to notice the issues in a new home until you actually live there.

The coverage period for materials and workmanship will usually last anywhere from one to two years. For the major structural components of a home, there may be coverage lasting up to ten years.

Most new construction warranties don’t cover household appliances, nor would they cover things like a small crack or the cost of having to move out of your home while repairs are being made.

Specific exclusions that are common in builder warranties include:

• Damage stemming from your own neglect or misuse
• Deterioration that would be considered normal, like shrinkage falling within industry standards
• Damage caused by outsiders like vandals or “acts of God”
• Any consumer product that is covered by its own warranty, such as your refrigerator

Warranties and State Laws

Some states have strict laws about what builders have to provide in terms of warranties. If you aren’t sure, you can talk to the contractor licensing board in your state or even the Attorney General Office to figure out what’s required.

A lot of states have either already done so or are in the process of increasing the duration of coverage from one to two years for workmanship and materials issues.

Filing a Claim

If you bought a new home and you experience an issue you believe could be covered by your warranty, read the instructions for filing a claim. Typically, there are one of two options provided. You might be instructed to send a letter to your builder letting them know, or there may be a phone number you can call.

If you do talk to the builder, keep records of all of your conversations. In fact, even if it’s not required, it’s a good idea to send a letter to your builder.

You also want to make sure you act fast because you don’t want a delay in reporting the issue to the builder to then put you outside your coverage period.

If you find yourself in a situation where you can’t find the builder, or they aren’t responsive, then you  might have to get a lawyer involved.

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