Warranties
California New Construction Warranties
New construction homes are becoming increasingly available as the economy and market continue to recover. One of the unique concerns that purchasing a new construction home raises is what happens in the event that a defect is discovered subsequent to the purchase. Because the seller is the person or entity responsible for creating the structure, buyers have an expectation that the seller will address defects with the property. To this end, builders and California law provide for new construction warranties.
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Some builders provide express new construction warranties to address buyers’ concerns. However, in the event that the builder does not provide a warranty, California law provides for implied new construction warranties. These warranties are contained in California Civil Code 896, et seq., also known as the “Right to Repair Act,” and are described below.
One Year Warranties
• “Fit and finish” of cabinets, mirrors, flooring, interior and exterior walls, countertops, paint finishes, and trim. California Civil Code section 900.
• “Manufactured products”, i.e. any product that is completely manufactured offsite, including refrigerators, stoves, etc., as well as HVAC units and fixtures. California Civil Code section 896(g)(3).
• Compliance with “interunit noise transmission standards set by the applicable government building codes, ordinances, or regulations in effect at the time of the original construction”, as applicable to attached structures. California Civil Code section 896(g)(6).
• Irrigation, drainage, and landscaping systems. California Civil Code sections 896(g)(7) and 896(g)(12).
Two Year Warranties
• “Untreated wood posts” that are installed in contact with soil such that they cause unreasonable decay. California Civil Code section 896(g)(8).
• Dryer ducts. California Civil Code section 896(g)(14).
Four Year Warranties
• Plumbing and sewer systems. California Civil Code section 896(e).
• Electrical systems. California Civil Code section 896(f).
• Exterior pathways, driveways, hardscape, sidewalls, sidewalks, and patios. California Civil Code section 896(g)(1).
• Untreated steel fences and adjacent components that cause unreasonable corrosion. California Civil Code section 896(g)(9).
Five Year Warranties
• Paint and stains causing deterioration of building surfaces. California Civil Code section 896(g)(10).
Ten Year Warranties
• All other components not specifically referenced in other warranties, including foundation systems, retaining and site walls, support beams, etc. California Civil Code sections 896 and 941.
Dispute Resolution Procedures
As its name indicates, the Right to Repair Act not only provides for warranties but also provides builders with the right to repair defects before being subjected to legal proceedings. Prior to filing an action against a builder, the claimant must submit a claim describing the defect and allowing the builder to inspect the defect. The builder then has the option to offer to repair the defect, mediate the dispute, or offer cash in lieu of the repair.
Importance of Understanding New Construction Warranties
The warranties provided by builders are exceedingly important because, unlike existing home purchases, the escrow process in connection with purchasing a new construction typically does not include a “physical inspection contingency” period. When buyers are purchasing an existing home, typically the buyer has an opportunity to conduct some due diligence as to the physical aspects of the property, and if the buyer is unsatisfied he or she can cancel the agreement without being in breach. Sellers of new construction, on the other hand, are often reluctant to include such a provision in their sales contracts. As a result, the new construction warranties provide important protections for buyers who might subsequently uncover issues for which the seller is responsible.
This article is not intended to be, nor should it be interpreted to be, legal advice. Please consult with an attorney concerning the specifics of your situation, and whether a new construction warranty might apply.