Numerous considerations go into home building, such as foundational aspects, location and design – yet, one thing that should occupy a higher priority is builder warranty. People get coverage or insurance for their car, health or even washing machine; the home should be no exception. From homeowner's investments to impromptu costly repairs, homeowners need to know the warranty coverage, including its duration.  

What Are Builder Warranties?  

Builder warranties are typically attached to new home construction or remodeling and cover items like flooring, plumbing and electricity. While similar, don't confuse a builder warranty with a home warranty (which is really a service contract) as it applies to existing homes and covers repairs for things like appliances or air conditioning systems.  

And although newly built homes usually have warranties, the specifications on the warranty coverage and the length of time depend on the state. Make sure to double-check with a real estate agent. A prime example is that since 2010, there are no longer mandated Texas builder warranties.

While Texas builder warranties are no longer in effect, the state does provide the Implied Warranty of Good and Workmanlike Manner and the Implied Warranty of Habitability. Likewise, Texas is still growing with a 14% year-over-year increase in new home building activity. So, it's best to stay informed if you are considering moving. 

Types of Coverage and Their Length 

Most builder warranties provide one year of limited coverage on workmanship and materials, including sliding, stucco, doors, trim, drywall and paint. Depending on the element in question, coverage can vary. Components connected to the home, such as HVAC systems, plumbing and electricity, get covered for about two years.

The most common coverage for significant structural damage resulting in an unsafe home is ten years – a roof susceptible to collapse would be under this category. Note that builder warranty coverage does not safeguard damaged appliances, small cracks or anything covered by a manufacturer's warranty.

Moreover, there are two types of builder warranties, implied and expressed. The former is often vaguely worded and has a 10-year liability cutoff period. The latter covers potential defects in workmanship that could impact the home's livability.   

Though a builder warranty is not mandatory in every state, such as Texas, homeowners take on significant risk if they do not have one. If the builder ever refuses to offer a warranty, do not use that builder.

Warranty Claims and Resolving Disputes  

Should the homeowner discover a defect in their home, they must first check their warranty to see if that issue is covered and for how long. Nevertheless, disputes are sometimes unavoidable between the homeowner and the builder or third-party warranty company. Disputed warranty claims get resolved through mediation or arbitration.

Mediation involves a neutral third party helping the homeowner and the warranty company reach an agreement and resolve their issue. If this is unsuccessful, the homeowner can submit a claim to arbitration, which is a less formal alternative to court. Nonetheless, arbitration is similar to court in that both parties appear at hearings, get legal representation and present evidence to support their case.

Generally, most warranties require that all parties accept the arbitrator's final decision without appeal. And while it is less expensive than court, arbitration can cost up to several thousand dollars.

When in Doubt, Hire a Pro

Be sure to enlist the professional knowledge and experience of a realty agent. They can review builder warranties to help you fully understand the coverage and potentially avoid dishonest builders.

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