Resale Home
Warranties
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Home Warranty Plans, Home Warranty Coverage and Home
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As
stated by the Texas Real Estate Commission, "
a residential service company (home warranty provider) offers home
warranty insurance policies to maintain, repair or replace all or any
part of the appliances, structural components, electrical,
plumbing, heating, or air conditioning systems of residential
property".
These residential service contracts are referred to as "One-Year Warranties" in the real estate industry. For a fee
($250-$500), these home warranty programs can be offered to either the
buyer or seller of an existing home. They are usually purchased
around the time of sale of the property to give the buyer the
assurance that if something goes wrong shortly after purchase,
the problem may be covered under a claim.
Although you may have contracted to buy a home where the owners
have already purchased a One Year Service Contract to enhance the sales
appeal, there is no guarantee that a claim of a specific type
will be covered. Each company offers different deductibles and
coverage. Therefore, you should make a point to read the each of
the insurance policies
carefully when you receive them (normally at closing).
There are many opinions as to the value of these home warranty
plans. The
most frequent claim in the Dallas Texas area is that of air
conditioner failure. Be sure to study any documents
closely in this area to understand exactly what will be covered
and when. I have heard many complaints stating that a few
companies try to "patch up" old worn-out units too many
times instead of replacing them. This approach causes a lot of
unnecessary aggravation to the new homeowner.
As
usual, do your homework before making a decision. However, if
the seller has already purchased a home warranty program and is willing to
transfer it to you, then there is obviously nothing that you can
do to influence the decision-making process. However, if the
sellers are offering a plan as part of the sale and have not
already purchased it, suggest that you would like the final
decision on the company or just ask for a "warranty allowance"
and then you can select the best home warranty company of your choice.
New
Construction
Home warranties
in Texas on new construction are not
regulated through the provisions of the Residential Service
Company (RSC) Act. New
construction builders usually utilize what are referred to as "risk retention groups".
These entities are better known as the "2-10 Plan" or "HBW"
(Home Buyer's Warranty), etc. There are many competing
companies.
These policies are usually marketed as providing 10 years of
coverage. However, you need to understand that not all
components are covered for that length of time and the 10 year
window primarily applies to structural components only. The
warranties are usually provided at no additional cost to the
buyer and are designed to
warrant the workmanship and systems and appliances of new homes
that the builders have constructed.
It
is important to note that risk retention groups are not
regulated by any Texas state agency. However, the Texas
Department of Insurance and the Office of the Attorney General
will process your consumer complaint if you should choose to
file one against a risk retention group.
When purchasing a new home, make sure to ask for
a copy of the warranty before signing your contract. Thoroughly
read the warranty to better understand your rights and
obligations should a claim arise.
NEW CONSTRUCTION
WARRANTIES
COLLEGE STATION, Texas – With a revised Residential
Construction Liability Act comes two new warranties for
construction or repairs begun after Sept. 1. 2003. The newest
version of the Act, which was adopted by the last regular
session of the Texas Legislature, will be phased in gradually.
When the Texas Residential Construction Commission adopts the
new warranties, they will supersede all existing implied
construction warranties. The two warranties cannot be waived,
but the contract between the builder and the homeowner may be
made tougher.
The first warranty sets minimum requirements for all new home
construction as well as home improvements and repairs.
Workmanship and materials are covered for one year; plumbing,
electrical, heating and air conditioning for two years; and
structural components for ten years.
The second warranty covers anything having a direct, adverse
effect on the habitable areas of the home. It ensures that
the home or home improvements are safe, sanitary and fit for
humans to inhabit.
“Homeowners should be aware that the new warranties do not
apply to construction that began before Sept. 1,” says Judon
Fambrough, attorney with the Real Estate Center. “Those who
have problems with work done before then are bound by the
existing warranties in place at that time.”
To read about recovery guidelines under the new law, see
“Fixin’ What’s Broke: RCLA Mandates Recovery Guidelines” by
Fambrough in the October 2003 issue of Tierra Grande.
The article can be downloaded for free at
http://recenter.tamu.edu/tgrande/vol10-4/1644.html
Companies listed here are
approved by the Texas Real Estate Commission and are provided as
a convenience only.
Dallas North
Properties does not endorse any specific Residential Service
Company.
