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A Builder’s New-Home Warranty – What is Typically Included

Purchasing a new home is exciting, indeed; and it is also the most expensive purchase most homeowners will experience in their lifetimes.  Because of that, homeowners will have questions about what inclusions a builder’s warranty entails.  The warranty can be within the sales contract or presented as a separate document.  New-home warranties stipulate which components of a home are covered, and for how long.  Warranties can be backed by the builder; or they can be purchased by the builder from an independent source that assumes responsibility for any possible claims.

 

Not all features of a new home receive the same type of warranty coverage.  Typically, one year coverage is given for labor and materials; two-year coverage is reserved for mechanical defects; and ten-year terms are offered for major structural defects, explained in a bit more detail, below.

 

Homeowners need to be aware that new-home warranties are limited; and stipulations within the warranty will indicate not only which repairs would be made, but how repairs would be made.  One-year coverage for workmanship and materials would include siding and stucco, doors and trim, drywall and paint; and two years of coverage would include the HVAC, plumbing, and electrical systems.  One and two-year coverages are known as ‘short-term’ warranties.

 

Ten-year warranties, on the other hand, are reserved for major structural defects; and this type of expanded coverage is known as a ‘long-term’ warranty.  Major structural defects would include problems within a home that could put the home’s residents in imminent danger such as roof that could collapse.  Though the structural defect, itself, would be under warranty, any costs the homeowners would incur due to temporarily leaving the home – such as hotel accommodations and dining out – would be out-of-pocket expenses and not reimbursable.

 

Usually, builders’ warranties do not cover features of the home that are, already, covered under a manufacturer’s warranty; this would include home appliances or equipment that are consumer products, such as refrigerators and dishwashers.  If these items are defective in any way, those defects would not be a result of improper workmanship; and it would be up to the new homeowner to contact any respective manufacturers.  Also, builders’ warranties do not, usually, cover small cracks in brick, tile, cement or drywall.

 

The Federal Housing Authority, or FHA, and the Department of Veterans’ Affairs state that builders must purchase a third-party warranty in order to protect buyers of newly-constructed homes backed by FHA or VA loans.

 

The Punch List

Even newly-constructed homes can possess flaws related to painting, drywall, incomplete work, etc. Because of that, it is wise for the new homeowners and the builder to create a punch list which is, simply, a prepared document that is used near the completion of the home’s construction that lists imperfections on the inside or outside of the home that do not meet contract specifications.  A punch list ensures that defective components of the home that are under warranty can be, quickly, addressed.  The builder would have a contractual obligation to fix the items on the list.  Homeowners should not assume, however, that a home warranty covers uncompleted items – some warranties exclude them.

 

Understanding what is included in a builder’s warranty gives new homeowners peace of mind!

Brandon Jones

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