What is a Structural Warranty? A Realtors Guide.

– iStock 668293628 – What is a Structural Warranty? A Realtors Guide.

There are many different ways your buyers can protect their new homes. Educating themselves and performing proper maintenance on their home top the list of home protection priorities, but there’s another important tool to remember: structural warranties.

What exactly is a structural warranty and what do real estate agents like you need to know about this type of protection? Here’s everything you need to know so that you can advise your clients appropriately.

Defining structural warranties

A structural warranty provides a written agreement between the home builder and the homeowner. It clearly defines the builder’s work-product obligations related to construction quality, as well as their continuing obligations. Under the agreement, the builder is the insured and the homeowner is the beneficiary.

What do structural warranties cover?

Structural warranties cover load-bearing components in the home. All of these features work together to create a solid foundation for the structure. They include:

  • Floor framing, including joists and bridging
  • Columns
  • Beams and girders
  • Footings
  • Foundation systems of all varieties
  • Load-bearing walls and partitions
  • Roof framing systems

If one of these components fails and needs to be repaired or replaced (and the issue isn’t due to maintenance neglect), the warranty coverage will kick in and pay for the damages.

Why do homeowners need structural warranties?

Unfortunately, one in four homes in the U.S. will have some form of structural distress to contend with. These repairs cost an average of $42,500.

Further, more than 80% of structural defects are caused by movements of soil under the foundation (something your clients aren’t likely to know or notice on their own).

A structural warranty in action

It can be difficult for homebuyers to visualize what happens when a home experiences structural distress, but here’s one example you can reference:

There was one 2-10 HBW member builder in New Mexico who had been judiciously enrolling all of his homes in our 10-year structural warranty program for more than 20 years. The builder constructed 8,800 homes without a single claim, until one subdivision became a major problem. After four years, 20+ homeowner claims came in over the course of a year, and each claim was from the same subdivision in central New Mexico.

Even though the builder had ordered a geotechnical investigation prior to construction, the data missed a critical component of the soil: water was entering the soil deep beneath the homes’ foundations. The homes’ foundations rested on hydro-collapsible soil that buckled when it came into contact with water, causing extensive damage to the foundation of the affected homes. It’s not something the homeowners would have ever been aware of until cracks and other issues became visibly obvious around the house.

Due to the structural warranty coverage, each home was repaired and the homeowners’ were spared some upsetting financial surprises. If the homes hadn’t been protected, the solution wouldn’t have been nearly as hassle-free (or affordable).

2-10 HBW offers comprehensive Systems and Appliances Home Warranties to help protect your clients from unexpected repair and replacement costs. Contact us to learn more.

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