Home Warranty Unenforceable When Builder Disappears

Added October 31, 2008 by Ilyce R. Glink

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Summary: A home buyer says he recently bought a home and the builder has not followed through on a home inspection or repair requests. The buyer is experiencing buyer's remorse because of the builder's bad behavior. The builder may be going under due to the economic climate and unable to provide the warranty that was in the contracts.

Q: I closed on a home in July. The builder stated that I have a one year warranty on the home for repairs.

Well, you know the story. The builder can't be reached to make repairs to my home. I haven't had the inspection I was supposed to have after living in the home for 90 days. Also, the builder was to provide a 2/10 warranty for my home which was returned by the warranty company unprocessed. The 2/10 warranty amount to be provided by the builder is on my HUD-1 closing form.

What legal recourse do I have to get the builder to honor the warranties? I waited until I was 50 years old to buy a home, and now I don't want the house. I need help. I don't know where to turn.

A: Hang on a moment! I understand that buying a house can seem like a scary amount of responsibility. But you already purchased this house. You generally can't return a house as you might return a product purchased at a store. You might be experiencing a good dose of buyer's remorse brought on by the builder's bad behavior.

Are you having major problems with the home? Or are you looking for your builder to perform an inspection of the home and you were hoping that the builder would fix the issues that came up during the inspection?

If you're not experiencing problems with the home, you could spend some money and find a good residential real estate inspector to go through your home and see if anything comes up, particularly if you don't have a clue about the ins and outs of living in a new home.

Just keep in mind that you'll pay the inspector a fee to go through the home. You will still have to pay someone to fix any items that might come up during that inspection if you determine that your builder is not coming back.

Please talk with a good real estate attorney who has experience with new construction contracts. You'll want to review what was promised to you in terms of the warranty. Then, have your attorney contact the builder to see what's going on.

What you may find, in the current economic climate, is that the builder is either bankrupt, has gone under or slowly going under. If the builder goes out of business, your warranties from the builder will likely be worthless. However, there may be underlying warranties from the materials manufacturers that may protect you somewhat. These manufacturers' warranties might include the windows, the heating and cooling systems, plumbing fixtures, roofing materials and some other components installed in the home.

You have to face the fact that the builder may be unable to provide the warranty you were promised. If that's the case, you own the home and will have to step up and make the necessary repairs to keep the home in good shape.

Buying a home isn't like buying dishtowels at your local department store. You can't just return it. It's only in extreme cases that a buyer has the right to rescind the purchase of a home. These extreme cases may involve fraud on the seller's part. Your attorney can counsel you further.

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