Builder Warranty

Overview

A Builder Warranty is a formal assurance provided by developers or construction contractors about the quality and structural integrity of a newly built property. This warranty serves to protect homebuyers from any significant construction defects and establish the builder’s accountability for the property’s structural soundness over a specific period. Warranties can cover various components of the home, from major structural defects to certain materials and workmanship scopes.

Examples

Newly Built Home:
- Abel purchases a new home which includes a builder warranty. The warranty ensures that the home will be free from major structural defects for 10 years.
Condo in a New Development:
- Emily buys a condominium unit in a newly constructed development. The builder warranty covers potential defects in common areas, such as roofing and foundational issues, for 5 years.
Custom-Built Property:
- Jon hires a construction company to build his dream house. The builder warranty includes coverage for mechanical systems like HVAC and electrical systems for one year post construction.

Frequently Asked Questions (FAQs)

Q1: What does a builder warranty typically cover?

A builder warranty often covers major structural parts like the foundation, load-bearing walls, beams, and roofing. It can also include systems such as plumbing, electrical, and HVAC for a specific duration.

Q2: How long does a builder warranty last?

The duration can vary based on the builder and local regulations. Typically, structural defects might be covered for 10 years, while systems and workmanship might be covered for 1-2 years.

Q3: What steps should a homeowner take if they find a defect during the warranty period?

The homeowner should immediately report the defect to the builder, often starting with written notification. The builder typically has a set period, such as 30 days, to address and remedy the issue.

Q4: Are cosmetic issues covered under a builder warranty?

Cosmetic issues, like minor scratches or cosmetic damage, are usually covered for a shorter duration (often 1 year) as compared to structural defects.

Q5: Can builder warranties be transferred if the home is sold?

Yes, in many cases, builder warranties are transferable to new owners within the warranty period, which can add to the resale value of the property.

Homeowners’ Warranty Program: A comprehensive program offering various warranties on new homes, often provided by third-party companies to cover defects not addressed by builder warranties.
Structural Defects: Significant issues impacting the structural integrity of a building, such as foundation cracks or load-bearing wall failures.
Workmanship: The quality and skill demonstrated in the building process; often covered under shorter-term warranties for materials and labor.

Online Resources

References

National Association of Home Builders. What Homeowners Need to Know About Warranties and the Law. Retrieved from NAHB website.
Federal Trade Commission. Buying a New Home. Retrieved from FTC website.

Suggested Books for Further Studies

“The New Home Warranty Handbook” by Joseph G. Tobin
“The Home Buyer’s Warranty Guide” by William M. Angel
“Housebuilding: A Do-It-Yourself Guide” by R Taylor & S. Skinner
“Understanding Construction Drawings” by Mark W. Huth
“The Elements of Building: A Business Handbook For Residential Builders & Tradesmen” by Mark Q. Kerson

Real Estate Basics: Builder Warranty Fundamentals Quiz

### What is a builder warranty? - [x] A guarantee provided by the developer or contractor covering the quality and integrity of the construction. - [ ] An insurance policy protecting the homeowner from any and all issues. - [ ] A legal document transferring property ownership. - [ ] A cost estimate document for home construction. > **Explanation:** A builder warranty is a formal assurance from the developer or contractor that the property will be free from substantial structural defects for a specified time. ### Over what period is a major structural defect typically covered under a builder warranty? - [ ] 1 year - [ ] 3 years - [x] 10 years - [ ] 20 years > **Explanation:** Major structural defects are often covered under a builder warranty for a period of 10 years, ensuring long-term protection from significant issues. ### What steps should homeowners take upon discovering a construction defect? - [ ] Ignore the defect as it's common in new homes. - [ ] Report the defect immediately before the warranty period ends. - [ ] Try to fix the defect themselves. - [x] Immediately report the defect to the builder in writing. > **Explanation:** Homeowners should report defects immediately in writing to the builder to start the remediation process within the warranty period. ### Can builder warranties be transferred if the home is sold? - [ ] No, builder warranties are only valid for original homeowners. - [ ] No, all warranties are null on resale. - [x] Yes, in many cases they are transferable within the warranty period. - [ ] Yes, but only with an additional fee. > **Explanation:** Many builder warranties are transferable to new homeowners within the specified warranty period, adding value to the resale property. ### What’s typically not covered under a builder warranty? - [ ] Structural defects - [ ] Major system failures - [x] Cosmetic issues - [ ] Foundation problems > **Explanation:** Cosmetic issues are often not covered extensively; they might be covered for a shorter duration compared to structural defects. ### What components might be included in a builder warranty coverage? - [x] Plumbing and electrical systems - [ ] Landscaping - [ ] Furniture - [ ] Personal belongings > **Explanation:** Builder warranties typically cover essential systems like plumbing and electrical, not landscaping, furniture, or personal belongings. ### For how long are cosmetic defects usually covered? - [ ] 5 years - [x] 1 year - [ ] 2 years - [ ] Not covered at all > **Explanation:** Cosmetic defects are often covered for only 1 year, reflecting a shorter-term approach compared to structural warranties. ### Which term refers to a program offering warranties on new homes from third-party companies? - [x] Homeowners' Warranty Program - [ ] Title Insurance - [ ] Home Inspection Program - [ ] Landscaping Package > **Explanation:** A Homeowners' Warranty Program is offered by third-party companies and provides additional warranty coverage beyond builder warranties. ### Who completes the responsibility in addressing reported structural defects under the warranty? - [ ] The homeowner must correct defects themselves - [ ] Local municipality officials - [x] The builder or contractor - [ ] Homeowners' association > **Explanation:** The builder or contractor holds responsibility for correcting reported structural defects within the warranty’s scope and timeframe. ### What kind of structural components are typically covered under a builder warranty? - [x] Foundation and load-bearing walls - [ ] Interior paint - [ ] Exterior landscaping - [ ] Decorative fixtures > **Explanation:** Structural components such as the foundation and load-bearing walls are typically covered, while more cosmetic aspects like paint and landscaping are not.