New-Home Defects: Holding Your Builder Responsible Under a Warranty

Many buyers choose newly built homes only to discover built-in damage later.

Before you moved into your new home, your local town, city, or municipality most likely inspected it and issued a certificate of occupancy. That indicated that the home was, at a minimum, livable. However, many new homeowners are unhappy to discover that the certificate doesn't guarantee that everything is in working order or even complete.

At least a year's worth of seasonal changes are often needed to put a newly constructed house to the test. For example, only in winter might you discover that water seeps into the basement or around window frames, that the landscaping was badly graded and leads to mudslides, or that your home has a mold problem. And guess what: Your homeowners' insurance policy probably doesn't cover construction defects.

You might therefore need to assert your rights against the builder, most likely based on the builder's warranty. This might be as simple a process as communicating with the builder; or it might involve making a formal claim and eventually going to court.

Are My New-Home Defects Covered by a Builder's Warranty?

Most home builders issue new owners a warranty (often called a "limited warranty") on their work, either within the sales contract or as a separate document. Interestingly, such warranties aren't necessarily required by state law, though you'll certainly want to check on the law in your state, and perhaps hire a lawyer for a consultation.

The builder's warranty's maximum term is typically actually a combination of time periods, based on the type of needed work. It might be broken up, for example, into one-, two-, and ten-year terms. Homeowners commonly receive:

  • a one-year warranty for labor and materials
  • two years' protection for mechanical defects (plumbing, electrical, heating, air conditioning, and ventilation systems), and
  • ten years' warranty for structural defects in the home.

The result is that some of the best parts of the builder's warranty expire quickly, such as for carpeting, tiles, paint, and roofing.

If you received a warranty from your home's builder, read it over to determine its length, who is supposed to handle problems (the builder might have bought third-party insurance), and what's covered and excluded.

Pay special attention to your own responsibilities under the builder's warranty: you might have been given a detailed list of maintenance obligations. Ignoring these gives the builder a perfect excuse to deny you protections under the warranty.

What Exclusions Are Normal to See in a Home Builder's Warranty?

Typical exclusions from a builder's warranty include:

  • damage owing to your own abuse, misuse, neglect, failure by you or your homeowners' association to provide maintenance (such as cleaning the gutters, draining your water heater, touching up caulk or grout, or dealing with pests), or failure to maintain adequate ventilation and humidity levels in the home
  • deterioration of construction materials within expected levels, including warpage or shrinkage within industry standards, or changes due to weather conditions, natural disasters, or soil movement or settling
  • damage caused by outsiders (such as rioters, vandals, animals, or airplanes) or "acts of God"
  • damage caused by people you hired to work on the property
  • your housing costs and expenses if you have to move out while repairs are being made, and
  • all home appliances or equipment that are consumer products, such as your refrigerator and dishwasher, some of which come with their own warranties (which the builder should have transferred to you).

How Do I Protect Myself From Future Builder Warranties Expiring?

Some home defects are hard to detect, so it's worth keeping track of upcoming expiration dates, then worth paying a professional to point out what the builder needs to fix.

In fact, many builder's warranties or contracts say they'll send a quality-control inspector within the first year to check on your house. Keep track of that date yourself, and make sure the builder's inspectors truly seems to be scouting for trouble. If not, hire your own. In preparation for any inspection, make a list of every problem you've observed. Something as apparently minor as a cracked tile could indicate a major problem, like a shifting foundation.

Can I File a Builder's Warranty Claim?

If the defective or damaged item is covered by the builder's warranty, read what it says about procedures for filing a claim. Many warranties require you to send written notification to the builder, while others give you a hotline to call.

In fact, sending a letter to the builder is a good idea regardless of what the warranty says. This shows that you're serious about asserting your rights, and creates evidence that you might later want to use in court. Send the letter by certified mail with a return receipt, so the builder can't later claim not to have received it.

Also keep notes on your every conversation with the builder, including the dates. You can use this information to confirm, in your letters to the builder, what you agreed to. And they might also be good to show to a judge someday.

Be prepared to act quickly. Sometimes you can protect your rights just by notifying the builder of problems within the warranty period. However, some warranties are cleverly written to let the builder string you along without making the repairs until the warranty period has run out and you've lost your rights. (Don't bring in any outside contractors to do repairs yet, as this could allow the builder to cancel the benefits of the warranty.)

If your builder isn't accepting responsibility, figure out whether a manufacturer's warranty might apply; for example, to an appliance, windows, roof shingles, or other product. You might be able to argue that the product itself failed, in which case a manufacturer that stands behind its product will provide replacements and repairs.

The catch, however, is that the product needs to have been installed properly, and improper installation in new construction is often the very core of the problem.

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