fbpx

Statute of Repose: How It Can Make or Break Builders

A construction worker in a high-visibility vest standing in front od a wood-frame house that's being built.

Nearly every single state in the US has a statute of repose that builders must abide by. These statutes of repose can make or break a builder’s success. But what are they, how do they affect you, and how can you manage them? Let’s find out.

What is a statute of repose?

Simply, a statute of repose is a written law that, in the context of home building, protects home buyers from structural defects over a certain period of time. If you build homes in states with a statute of repose, you are obligated to follow them.

Why should I care about statutes of repose?

Statutes of repose create legal liabilities for builders. In other words, in most states, you must provide some kind of warranty guaranteeing the home’s structural integrity. So, if something goes wrong with the home’s structure within the time frame determined by the statute of repose, you are responsible for addressing the problem by law.

Consider a common example. The State of Texas has a 6-year statute of repose. When a Texas builder completes building a home, they are responsible for addressing defects to the home’s structure for 6 years.

That may seem straightforward, but think about this: 80% of structural defects are caused by soil movement, something that is entirely out of your control. And soil conditions can vary from lot to lot. And yet, if you build a home in Texas, you are responsible for guaranteeing that every single house will be free of structural defects for 6 years.

What happens if a home I build has a structural defect during that time?

You must, by law, fix it. And it likely won’t be cheap. In fact, it could be devastating to your business.

The average cost for builders to address a structural defect is $75,000–$125,000. That’s for every separate defect. And often, structural defects occur in clusters. That can be a huge problem, especially if you build tract housing.

Think about it this way. If a builder builds 20 houses a year and sells all of them for $400,000, that builder’s total liability would be $8 million ($400,000 x 20) for 10 whole years. And for every year that builder builds more houses, the liability continues to go up.

Yikes. What can I do to avoid that problem?

Whether you know it or not, by simply being a builder, you’re already dealing with the problem of implied warranties by default.

Implied warranties—which exist in all 50 states—demand that you have a solution to structural-defect problems. If you abide only by implied warranties, the only way to avoid the problem of statutes of repose is by paying to fix the structural defects yourself. For most builders, doing so would most likely bankrupt them.

The safest and most effective way to address a statute of repose is with a written, insurance-backed, third-party structural warranty.

Why written? Because having a written warranty sets expectations and provides clearly defined performance standards. That’s different from implied warranties, which aren’t standardized and are often up to a court’s interpretation. Court interpretations can be impossible to predict. A written warranty takes the mystery out of it.

Why insurance backed? Because insurance-backed warranties protect your bottom line. Instead of having to pay out of your own pocket to comply with a statute of repose, insurance-backed warranties take on the financial liability.

Why third party? Because third-party validation builds trust, shows neutrality, and protects your future.

2-10 Home Buyers Warranty (2-10 HBW) has provided this solution to builders since the 1980s. It’s the reason 1 in 5 homes in the US includes a structural warranty from 2-10 HBW, the industry leader in coverage.

I’ve heard that warranties aren’t worth the paper they’re written on

Unless the paper your warranty is written on is worth $75,000–$125,000 a sheet, this is patently false.

Even builders with good track records can succumb to structural defects. Remember that 80% of structural defects occur because of soil movement, which no builder can totally control.

A structural warranty from 2-10 HBW covers those uncontrollable situations and makes them easier to solve.

It takes financial liabilities off your shoulders, letting you focus on building quality homes.

It protects you and your buyers throughout your state’s statute of repose, letting you plan for and pursue a better future.

And a structural warranty from 2-10 HBW provides performance standards for workmanship and distribution systems, too. That helps you avoid “Well, I thought I was covered” conversations with your buyers, which can hurt your reputation.

So, if someone tells you, “Warranties aren’t worth the paper they’re written on,” ask yourself, “What does the person telling me this value?”

Conclusion

A structural warranty from 2-10 HBW is one of the best ways to manage a statute of repose. Beyond helping you follow the law without going broke, it shows buyers what matters to you. Safety. Satisfaction. Solutions.

Protecting yourself and your buyers with 2-10 HBW isn’t just the right thing to do. It’s also a good way to keep doing what you do best—build quality homes. Protect yourself, your future, your buyers, and your bottom line with a structural warranty from 2-10 HBW, the industry leader for over 40 years.

Learn how you can protect your business and add valuable selling points to your new builds with a 2-10 HBW structural warranty.

You Build it, We'll back you up.

Learn why 1 in 5 new homes nationwide are covered by a 2-10 HBW Structural Warranty.