Why do Home Builders Need Structural Warranties?


Make Handling Complaints Simpler- For many people, the purchase of a new home is the single-largest transaction in their lives, and if the home does not satisfy the new homeowner’s expectations, the relationship between the builder and homeowner will deteriorate. If problems occur, there will be complaints, and possibly even lawsuits.

It’s difficult to tell a new homeowner that their complaint is unreasonable, but if a builder can point to a detailed warranty that all parties agreed to, everyone will be on the same page. Additionally, responsibilities are clearly outlined for the builder and the homeowner. This includes construction performance guidelines that the builder must adhere to, and maintenance standards for the homeowner.

Save Time- Warranty companies handle homeowner phone calls and complaints for the 10 year duration of the warranty, leaving builders more time to run their business. The warranty company will help the builder and homeowner conciliate their claims.

Provides Confidence to Home Buyers- Home buyers recognize the benefits of a comprehensive insurance-backed structural warranty. 94% percent of home buyers surveyed think a structural warranty is valuable when purchasing a new home. This means home buyers are more likely to purchase from a builder who offers an insurance-backed structural warranty.

A Helpful Sales and Marketing Tool- A structural warranty is also a helpful component that can be highlighted when builders are actively selling and marketing their new homes. Buyers find it easier to trust a builder who can confidently say, “In the event a structural failure does occur, you can sigh with relief knowing that you’re covered for up to 10 years.”

It Makes Good Business Sense- In short, an insurance-backed structural warranty ensures that the warranty insurer will cover the cost to repair qualified structural defects in the home. These warranties insulate the builder from the financial risk of making repairs and guarantee that a collapsed column won’t buckle the business’s finances.

Structural Issues Are More Common Than Builders Think- Most homes are designed to move no more than half to one inch, a magnitude of movement that is completely normal and expected. However, there will be a certain number of homes that will heave or settle more than expected, experiencing major structural distress and requiring costly repairs. On average, these repairs cost $42,500—no small sum for a builder or homeowner to pay.

Check out a 2-10 HBW case study where damage occurred when least expected in Maryland.

Educates Home Buyers- The warranty company should provide the homeowners a maintenance manual to alert them to the importance of home maintenance. The warranty and manual should explicitly state that the homeowner is responsible for proper maintenance of the home. Proper maintenance includes planting trees and shrubs an appropriate distance away from the home and conforming to generally accepted landscape practices for the region. It’s well known that maintaining proper surface grading and maintaining gutters and downspouts, when provided by the builder, will improve structural performance.

It’s Easy as 1, 2, 3- Once a homeowner files a claim, the builder will be notified. At the warranty insurer’s expense, the engineering professionals will perform a claims investigation, prepare a report, recommend repair procedures if warranted and independent contractors will make the repairs. Getting a claim resolved couldn’t be easier for the builder. The homeowner, builder and insurance company all have clearly defined responsibilities and should know what to expect if an issue arises.

Avoid Costly Litigation- Most structural warranty documents should include binding arbitration to resolve issues quickly and fairly. A common misconception is that the structural warranty company will always side with the homeowner during a dispute. In reality, the warranty company takes a neutral standpoint.

The warranty is an express limited warranty. Legally, the warranty covers the bulk of a builder’s implied warranty obligations, but it doesn’t cover all possible claims a homeowner may have against a builder. Each state is different, and a builder could have additional contractual or statutory requirements beyond the warranty. The state’s statute of repose may ultimately limit the builder liability to the homeowner. Learn more about your state’s statute of repose by visiting 2-10.com/StatuteofRepose.

Learn how risky it could be to forego a structural warranty.
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