Builder Warranties: What to Ask When Buying New Construction

If you're in the market for a new construction home, it's important to understand the builder warranty and what it covers. A builder warranty is a type of insurance policy that protects homeowners from defects in the construction of their homes. We'll discuss the ins and outs of builder warranties, why you need one, and how they may differ from one builder to another.

Key Takeaways

• A Builder warranty is not the same as a standard home warranty. Builder warranties protect against the construction and materials of new construction homes such as major structural defects.
• Many builders offer some type of builder warranty coverage, and in some states, a one-year builder warranty is required by law.
• If you’d like to increase your coverage, you may decide to purchase a separate home warranty in addition to your builder warranty.
• Builder warranties typically cover things like structural elements, home systems, foundation, roof, framing, walls, floors, ceiling, doors, windows, and general workmanship. But be sure to read the specifics of your warranty.
• Builder warranties do not cover damage caused by normal wear and tear or negligence caused by the homeowner.

Is A New Home Warranty The Same As A Builder Warranty?

Yes, a new home warranty is the same as a builder warranty. A builder warranty is a type of coverage that helps protect homeowners against any defects in the construction or materials of their home. The warranty is provided by the builder or developer and will cover various aspects of the home. Potential homeowners need to understand what a builder warranty covers before signing on the dotted line. Some builders may stop coverage at the one-year mark while others offer an extended 10-year warranty on various systems of a home. Choosing a builder that offers a comprehensive warranty could be a sign that they construct high-quality homes built to last.

What Builder Warranties Are Typically Offered On New Construction Homes?

1-year warranty

In many states, builders are required by law to offer a one-year warranty. This warranty covers construction or material defects with the home for one year after completion.

It’s normal for your home to settle slightly during the first year. This is because the builder has constructed a house on an otherwise undisturbed piece of land. It’s also common for the wood frame of your new home to continue to lose moisture in the first year. In certain parts of the country, the freeze-thaw cycle can also cause windows to become misaligned and drywall nails to back out.

We recommend hiring an independent home inspector a few months before your one-year warranty is set to expire. Send the inspection report to the builder and ask them to repair any issues that are covered under the terms of the warranty. Keep in mind that builders will not cover normal wear and tear.

1-2-10 warranty

A 1-2-10 warranty is an extension of the standard one-year warranty. While builders are not required to offer this extended warranty, it could be a good sign that the builder is willing to stand behind the quality of their construction. This type of builder's warranty offers general protection for one year after the home is completed, two years on major systems (such as air conditioning and plumbing), and ten years on the structure of the home.

1-2-5-10 warranty

Similar to a 1-2-10 warranty, a 1-2-5-10 warranty is an extension of the standard one-year warranty. This type of builder's warranty offers general protection for one year after the home is built, two years on major systems, five years on water intrusion, and ten years on major structural defects. This type of warranty is the most comprehensive a builder would offer and can provide peace of mind for homeowners, as it covers a wide range of potential problems that could occur after building a new home. It’s important to ask your real estate agent which type of warranty a local builder offers.

Why Do You Need a Builder Warranty?

There are many reasons why you might need a builder warranty for your new construction home. One of the most common reasons is that it can help protect you from any defects in the construction of your home. If there are any problems with the build, such as water damage or electrical issues, the builder warranty will cover the cost of repairs.

Another reason you might need a builder warranty is that it can provide peace of mind. Every new home is bound to settle and shift during the first year. A small amount of settling is completely normal but if it becomes severe, it may be wise to get the opinion of a structural engineer. If something goes wrong with your home, you'll know that you're covered and won't have to worry about the cost of repairs.

What Does A Builder Warranty Cover?

A new home builder warranty typically covers defects in the home's construction or the materials used. This can include problems with structural elements, the foundation and footings, plumbing system, framing, walls, floors, ceilings, doors, windows, electrical system, roofing, shingles, and general workmanship.

What Doesn't A Builder Warranty Cover?

Builder warranties typically do not cover damage caused by normal wear and tear or by negligence on the part of the homeowner. Additionally, builder warranties usually do not cover household appliances, so if you're having problems with an appliance in your new home, you'll need to contact the manufacturer directly. The builder warranty will not cover any damage that occurs outside of the warranty period. Also, if you decide to sell your home within the warranty period, some builder warranties are not transferable to the buyer. Check with your builder to see if the warranty can be transferred should you decide to sell.

Ask The Builder What Their Warranty Covers

When choosing a builder for your new construction home, it's important to consider what type of builder warranty they offer. Some things to keep in mind include:

• What does the warranty cover? It should cover defects in the home's construction, such as water damage, structural settlement, or electrical issues. Make sure to research what your builder warranty covers.
• What is the timeline of the warranty? Most builder warranties will cover the first year after the home is built. However, some policies may cover specific systems such as the plumbing for two years. Make sure to check the timeline of your policy to see how long you're covered.
• What are the exclusions? Every builder warranty has exclusions, so read the fine print. Common exclusions include damage caused by normal wear and tear or natural disasters.
• Is there a deductible? While uncommon, some builder warranties will have a deductible, which is the amount you'll need to pay out of pocket before the policy kicks in. Deductibles can range from $500 to $2,000, so choose a policy with a deductible that works with your budget.

The Pros Of A Builder Warranty

• Protection against defects: One of the most significant advantages of a builder warranty is that it can help to protect you against any defects in the construction of your home. If there are any problems with the build, such as water damage or electrical issues, the builder warranty will help cover the repair cost.
• Increased value: Another advantage of a builder warranty is that it can help increase your home's value. If you have a warranty in place, potential buyers will know that the home has been well cared for. They can rest assured that any defects in the home's construction have been addressed. This can help increase your home's resale value and make it more attractive to potential buyers.
• Peace of mind: Finally, a builder warranty can also provide peace of mind. If something goes wrong with your home, you'll know that you're covered and won't have to worry about the cost of repairs.

Home Warranty Vs. Builder Warranty: What's The Difference?

When it comes to warranties for a home, there are two main types: home warranties offered by a warranty company and builder warranties offered directly by the builder. So, what's the difference between these two types of coverage?

Home warranties offered by a warranty company are typically meant to cover pre-owned homes. A home seller may decide to offer a home warranty to provide the buyer with peace of mind. This is especially useful if the home is older. Most home warranties only cover the systems of a home which include HVAC, plumbing, electrical, and appliances. They usually stop short of covering defects in the construction of the home such as structural issues or water damage.

Builder warranties, on the other hand, are offered by the builder of a new construction home. They typically cover major structural or material defects in the construction of the home in addition to the various systems of the home.

Which Type Of Warranty Is Right For You?

If you're buying a new construction home, it's essential to ask the builder if they offer a warranty. Most builders offer a one-year warranty so it's worth looking into. However, if the builder doesn't offer a warranty or you're unhappy with the coverage they provide, you may want to consider purchasing a supplemental home warranty. Home warranties can be an important safeguard against potential problems with your new home, and they can give you peace of mind knowing that you're covered in the event of an issue.

If you're considering purchasing a new construction home, ask the builder about their warranty policy. It's important to read the fine print carefully to see what's covered and what's not. Once you've decided if the warranty is right for you, be sure to get it in writing so that you're protected in the event of any problems that may occur down the road with your new home.

Builder Warranty Vs. Appliance Manufacturer Warranty

When it comes to appliances, most new construction homes will come with a warranty from the appliance manufacturer. This warranty covers defects in the manufacturing of the appliance and typically lasts for one year. Builder warranties do not typically cover appliances, so if you're having problems with an appliance in your new home, you'll need to contact the manufacturer directly.

How And When Do You Get a Builder Warranty?

A builder warranty is typically included when purchasing a new construction home. The builder will provide a document outlining the coverage and what's included. Be sure to read this document carefully to understand the terms of your coverage. Have your Realtor request a copy of the builder warranty before you agree to purchase the home.

What happens if you have a problem with your new home?

You'll need to contact the builder directly if you have a problem with your new home that’s covered by the builder's warranty. The builder will send someone out to inspect the problem and determine whether or not the warranty covers it. If it does, they'll provide you with a repair or replacement at no cost to you.

When does a builder warranty start and end?

A builder’s warranty period starts on the closing date and lasts one year. Some builder warranties can include extended coverage for specific systems of a home beyond the one-year mark. For example, a 1-2-10 warranty provides general coverage for one year, HVAC and plumbing for two years, and a structural guarantee for ten years.

Negotiate your warranty terms before you sign your purchase agreement with the builder

Most new construction home buyers don't think about the builder's warranty until after they've already moved in and something goes wrong. By then, it's too late to negotiate the terms of your coverage. Read the fine print carefully and understand what's covered before you sign on the dotted line.

Should You Purchase A Home Warranty As Well?

Whether or not you should purchase a third-party warranty is a personal decision. Many new homeowners feel more comfortable with the extra coverage, while others prefer to save money. Ultimately, many of the items covered under a home warranty are also covered under the builder’s one-year warranty. We would recommend purchasing a home warranty plan once your builder’s warranty expires.

How To Get the Most Out of Your Builder Warranty

Be sure to keep all receipts and documentation from the building process, as you may need them in case of a problem. Additionally, take pictures of any damage or problems to have visual documentation as soon as you notice them. Don’t pay to repair issues and assume the builder will reimburse you.

What Should You Do Before Your Builder Warranty Expires?

As your builder warranty nears its expiration date, start to keep an eye out for any problems or damage that may have occurred. If you notice anything, document it with pictures so that you have evidence if you need to make a claim.

We recommend paying for an independent home inspection a few months prior to your warranty expiration date. Send the inspection report to the builder to see what items are covered under the warranty.

How Do You Make a Warranty Claim?

If you have a problem with your home that's covered by the builder warranty, the first step is to contact the builder directly. They'll send someone out to inspect the problem and determine whether or not the warranty covers it. From there, they'll provide you with a repair or replacement at no cost to you.

What do you do if your warranty claim is denied?

If your builder warranty claim is denied, you have a few options. You can try to negotiate with the builder to see if they'll reconsider their decision. Some may even threaten to leave the builder a negative online review if they are unwilling to fix the issue.

You can also take legal action against the builder, but this should be a last resort. Hiring an attorney for arbitration can be expensive, and there's no guarantee you'll win your case.

What Are Some Common Exclusions From Builder Warranties?

Builder warranties typically exclude coverage for problems caused by normal wear and tear, lack of maintenance, or damage the homeowner causes. Additionally, most warranties don't cover cosmetic damage or defects that don't affect the home's functionality.

Some builders offer limited coverage for structural defects. If you're concerned about structural damage, ask about it before purchasing your home. Some builders offer longer-term structural warranties.

How Much Does a Builder Warranty Cost?

Most builders include the cost of the warranty in the price of the home, but some builders may charge an additional fee for extended coverage.

What Is The Most Common Claim On A Homebuilder Warranty?

All new construction homes will need some minor adjustments during the first year. This is in part due to the home settling over time. Since a new home is built on what was previously undisturbed land, the home will settle.

Some common signs of settling include hairline cracks in the concrete of a driveway or garage, grout becoming dislodged in between tile flooring, and drywall nails starting to protrude from the wall.

The wood frame will also continue to lose moisture over the first year. This may cause windows and doors to stick.

These are common issues that occur with nearly every new home. The builder’s one-year warranty should remedy these.

Do I Need A Home Inspection If I Have A Builder Warranty?

While you're not required to have a home inspection, getting one is always a good idea. A home inspector can identify potential problems that your warranty may not cover. In addition, even the best builders make mistakes. There are so many subcontractors that work on building your home that you want to ensure it was done correctly.

Questions To Ask About The Builder Warranty

As you can see, there's a lot to know about builder warranties. Ask your builder about their warranty policy if you're considering purchasing a new construction home. Here are some questions to get you started:

• What does the warranty cover?
• What doesn't the warranty cover?
• How long does the warranty last?
• What should I do before the warranty expires?
• How do I make a warranty claim?
• What if my warranty claim is denied?
• Is the warranty included in the sales price?
• Is the warranty transferrable if I sell the home?

Take some time to research builder warranties before you purchase a new construction home. It's important to understand what's covered and what's not so you can prepare to use the warranty. When in doubt, work with a Realtor who is experienced with new construction homes.

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