I recently had a conference call with an agent and his buyer who was purchasing new construction from a small builder. In the course of the conversation, we started talking about the builder’s warranty (which there was none) and the agent chimed in with the following: “Well, even without a written warranty, the buyer will still get the one year warranty that is required under state law.” Unfortunately, I had to correct Mr. Agent in front of his buyer by letting him know that the only warranty that a builder provides by law is the Implied Warranty of Habitability.
[photopress:oldhousecrunch.jpg,thumb,alignright]Good news was this warranty is an implied warranty in the contract and the statute of limitations on bringing a claim under the contract is 6 years, not one (subject to a bunch of other issues too complex for this post). Bad news was that the Implied Warranty of Habitability is very limited and basically means that the home can be lived in. In recent years, it has been extended to things like conformance with building codes. It does NOT, however, cover things that a new construction buyer usually deals with post-closing. Things like paint chipping, floors warping, siding going bad, window cracks, carpet coming up, etc., etc., etc. These defects are usually smaller items but can add up in total to a lot of money and even more frustration. The only warranty that would cover something like this is a written warranty from builder to buyer. If one does not exist, then no warranty and no recourse to Buyer. Buyers should also read the fine print as many builder warranties contain more holes than swiss cheese. Don’t rely on the fact is says “Warranty” on top of the page. In my experience, the good builders usually provide pretty decent warranties. The smaller builders are across the board. In this case the old adage applies — Get it in writing!