Home Warranties

Ask your agent if he/she is aware of any existing home warranties that may be in effect or available for the house you are buying. Here are some possibilities:

New Home Warranties: New home builders typically provided some kind of extended warranty covering the structure of a home for 5 to 10 years. The remaining term on such warranties usually transfers to a new owner automatically. If you are buying a house that is less than 10 years old, you may have some coverage under the original new home warranty.

Resale Home Non-Structural Warranties: Several companies provide non-structural warranties on resale homes. It is very important for you to read these warranties to see what is covered, what is excluded and how warranty work is performed. In addition to excluding any coverage for structural defects, these warranties typically do not cover the roof either. They usually do cover kitchen appliances along with plumbing, mechanical and electrical components of the house.

Resale Home Structural Warranties: We have checked with large home warranty companies and with companies that provide structural warranties for new homes and have not been able to find a structural warranty for resale homes. We hate to say that such coverage does not exist — it’s hard to prove a universal negative. However, we have not been able to find a company that provides one.

Many real estate companies and agents promote these resale home warranties. In our experience, they do so for four reasons:

1. The actual coverage can be beneficial in some cases.
2. It is believed to be a good liability reduction technique for the real estate company and agent.
3. It is used as a marketing technique to attract buyers who tend to be reassured by a warranty.
4. The company or agent can make a few dollars by selling these plans.

If you are buying a new home, make sure that the builder has given you a copy of the warranty provisions. Please read them carefully. If you are buying a home that is less than 10 years old, there may be an existing warranty that is transferable. In our opinion, you should be cautious of the coverage and reliance on such warranties. They are typically very limited in scope and some of the warranty companies may no longer be in business.

If you are buying a resale home and you are interested in obtaining a non-structural warranty, you may contact the companies that provide them, such as Fidelity National Home Warranty, American Home Shield, and Residential Warranty Services.