Buying houses can be very different in terms of protection and coverage for what you pay for. Most home buyers don’t realize it, but getting completely brand new home with full warranty coverage from builder makes a huge difference.
Can you imagine saving most of your life just to get a high percentage mortgage on a house that starts falling apart as soon as you move in.
The only way to protect yourself during house transaction is to make sure it was finished by licensed home builder company with full home building warranty coverage.
Now let’s list what we get new build purchase
Home Building Warranty
- Workmanship and Materials
- Flooding and Waterproofing
- Mechanical / Plumbing / Electrical
- Building Code Violations
- Structural of the House
This is hell lot more than getting absolutely nothing when buying a house from someone that lived there for years. Some home owners never use the warranty and some are able to save thousands of dollars in fixes.
What is Not Covered by Home Building Warranty?
It is as important to know what is not being covered by the builder. All the time home owner claims are submitted for something that warranty is not intended to cover. Unfortunately most of us don’t realize these details until it’s too late.
Home insurance is completely different from builders’ warranty. Buyers, sellers and even real estate agent mix it up all the time and think it’s the same thing. Your better understand what most home builders do not consider as their responsibility.
Not Covered By Home Warranty
- Natural Disasters
- Work Done by Others
- Detached Structures
Remodel On Point dives deeper to explain how and why certain damages won’t be fixed or pay for by original home builder even when full warranty is provided.
Natural Disasters – There is no way contractors can control weather or fix homes after disaster.
Appliances – Covered by brand or manufacturer. Often installed and supplied by third party.
Work Done by Others – If additional work was performed by separately hired person/company.
Detached Structures – Normally warranty applies only to homes and not near by structures.
Unlike home insurance that make protect entire house with belonging from damage or theft, home building warranty only applies to items that were completed by licensed company.
Examples of Home Warranty Structure
Because every part of house has different lifespan it would make sense to have separate timelines for warranted items. We cannot say that all states are the same but at least our team can give a close example of what it looks like.
One Year Warranty Coverage
Typically after home construction materials and workmanship are included in home warranty for only 1 year. On top of that most materials used in construction have separate protection from manufacturer. It can be flooring, tiles doors, roofing and other materials.
Two Years Warranty Coverage
In new homes you don’t have to be worried about mechanics and violations of building code. Most companies would fix plumbing, electrical and HVAC within first two years of something is wrong with them.
Five to Ten Years Warranty Coverage
Depending on state and builder company new homes should have extended warranty on structural details of the house. This means that any failure or damage to structural walls, foundation or beams within that period of time is fixable by builder.
Company Costs to Have Building Warranty
Now we are going to look on the other side of home protection and what it takes to provide warranty. It is handled by home building or construction authority within state/area that regulates that type of work.
Companies that are registered and licensed obey all rules and regulations that apply to buyer protection program. Annual or monthly fees are paid to building authority by all registered builders. Smaller companies pay $1500 – $3000 per year and larger firms can expect their bill to be 10 times higher.
On top of that every house that is registered for warranty has a deposit of $10,000 – $30,000. It means that builder puts a deposit for warranty to building authority and if within two or so years there are no claims from home owner, he takes money back.
What Happens to Builders Who Ignore Claims?
Regardless of whether warranty claim is properly submitted or improper annoyance, it has to be take care of. Builders are not to decide who they should respond to and if repair should be made under home protection system.
Every detail is controlled by proper authority and they penalize those who don’t follow rules. So what can happen to home builders who ignore home warranty claims?
- Order to Fix Immediately
- Penalty or Fine
- License Suspension
- Paid by Deposit
These systems are bias and never take side of home builder or client. So let them handle what they are paid to do and fix parts of the house that are under warranty.
Order to Fix Immediately – repeated ignorance of fixing items by builder or not responding to claims can lead to orders by association. They can threaten to shut down company membership and suspend warranties.
Penalty or Fine – Building associations have ability to issue fines for companies that are members and don’t follow the rules. I can easily be several thousand dollars per issue.
License Suspension – Builders that don’t want to play along and hide for month without proper response can have their state builder license suspended.
Paid by Deposit – Original deposit by builder can be used to cover damages or faulty work that is covered by warranty if builder does not agree with verdict of authority.
Importance of Registered Builder
It appears that almost anyone can construct a house, live in it or sell it to someone else. For actual construction there is no mandatory law that can make everyone register with building association.
We however think that new homes in 21st century have to be built only by registered and insured companies with full warranty coverage for the house.
Registration is not an easy process and companies have to prove they are experienced and knowledgeable. Some authorities even check for financial statues to protect buyers from bankruptcy of builder.
If builder company is not registered with builder association that controls standards and warranty issues, they cannot legally help with any deficiency afterwards.