The Hidden Risks of New Construction Homes
Homebuyers might think that buying a home with new construction means there’s nothing to worry about. Everything is brand new so what could go wrong, right? Unfortunately, some builders cut corners in order to reduce costs, and sometimes honest mistakes happen and after a short amount of time the home becomes unsafe. That’s where a builder’s warranty comes in.
What Is a Builder’s Warranty?
A builder’s warranty is essentially an insurance policy for you, the homebuyer. If you buy a newly constructed home, the home builder promises said home will be free from structural, electrical, plumbing and mechanical systems defects. The builder warranty promises the materials it uses and the workmanship completed will be up to a certain standard.
The time period the builder warranty covers is usually pretty short and typically follows the 1-2-10 Warranty Mode: one year for workmanship and materials, and two years for anything electrical, mechanical or plumbing-related and ten years for structural components. This model is the industry benchmark, but not all builders follow this model. Be sure you are aware of the terms of your builder warranty.
Builder’s warranties come in two forms: one backed by the builder itself, one backed by a third party insurance company. If your builder’s warranty is backed by the builder itself, you should consider purchasing a separate homeowner’s warranty. That way you’re protected in the event the builder goes bankrupt and can’t pay for the repairs.
Note: If you sell your home within the active time frame of the warranty, the protection will transfer to the new owner.
What Does the Warranty Cover?
A builder’s warranty typically covers components of your home that are directly related to the builder’s workmanship and materials they use during the construction. Here is breakdown of what is commonly covered:
- Electrical wiring and systems
- Plumbing, including water, gas, drain, or vent lines
- HVAC system components
- Water heater functionality
- Range exhaust units
- Garage door openers
- Built-in whirlpool tubs (motors, pumps, and air switches)
- Sink, bathtub, shower, and toilet stoppages
- Central vacuum systems and associated ducts
- Roof collapse or structural failure in load-bearing areas
In addition, builder warranties often cover the following interior and exterior elements:
- Interior surfaces – Including drywall, paint, and trim (typically covered for workmanship defects within the first year)
- Doors and windows – Covered for poor installation or workmanship, but glass or hardware may be excluded from warranty
- Roofing materials and installation – Usually limited to defects in workmanship, not environmental damage like wind or hail
- Structural components – Such as foundation, framing, beams, and load-bearing walls (often covered up to 10 years depending on the warranty)
Always check your specific warranty documentation, as coverage can vary by builder. Warranty requirements and coverage can also vary by state
What the Warranty Doesn’t Cover
While a builder’s warranty provides important protection for many aspects of your new home, it does not cover everything. These warranties are generally limited to construction-related defects and exclude items outside the builder’s control or beyond the scope of initial workmanship.
Here are common exclusions typically not covered under a builder’s warranty:
- Household appliances (however these are usually covered by the manufacturer’s warranty)
- Fixtures and equipment not installed by the builder
- Cracks in bricks, cement, or drywall that are considered cosmetic or due to settling
- Damage caused by improper maintenance or homeowner neglect
- Weather-related damage
- Damage resulting from owner modifications, such as DIY repairs, remodeling, or alterations made by non-qualified individuals
- Normal wear and tear
- Expenses incurred due to repair work, such as hotel stays, dining out, or temporary relocation
It’s essential to read the warranty documentation thoroughly to understand both the limitations and your responsibilities as a homeowner.
What Happens if There’s a Problem
If you think there’s a problem that may be covered under the builder warranty, act quickly to ensure a quick resolution to the issue. Here’s typically what you should do if a problem arises:
- Review Your Warranty
Start by reading your warranty carefully to confirm two key points:- The issue is covered under the warranty terms
- You’re still within the applicable coverage period
- File a Written Claim
If your issue qualifies, you’ll need to file a written claim with the builder or the third-party warranty provider. Be sure to include:- A clear description of the problem
- Supporting documentation (e.g., photos, inspection reports, or invoices)
- Observe Time Limits
Many warranties require you to submit claims within a specific time window (often 30 days) after discovering a defect. Failing to meet this deadline may result in denial of your claim. - Inspection and Review
After submitting your claim, the builder or third-party warranty company may initiate a formal review process. This could include:- Dispatching an inspector to evaluate the issue
- Assessing whether the defect meets the warranty’s performance standards
- Resolution
If your claim is approved, the builder or warranty provider will:- Repair or replace the defective component
- Or, reimburse you for the reasonable cost of the repair (The total liability is often capped at the original purchase price of the home.)
By understanding the process and acting quickly, you can help ensure the issue is resolved efficiently and within the terms of your warranty.
Conclusion
A builder’s warranty is the homebuilder’s way of saying it stands by its product. So if you’re purchasing a new home, you should make sure the builder has made one available and then you should read it so you know what it covers. If you don’t feel protected, see if you can negotiate with your builder or purchase supplemental coverage. Your home should be your sanctuary and ensuring that it’s structurally sound and all the systems are working is a big part of that. Need help on your real estate journey? Take SOLD.com’s quick quiz to get the support you need today!
