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Home Warranties
Thursday, 07 October 2004

                                    New Home Warranties
A builders new home warranty is a marketing tool that lures families into a false since of security
Warranties for Newly Built Homes: Know Your Options
For many people, a home is the most expensive purchase they ever make. It’s no wonder, then, that buyers of newly built homes are interested in warranties, which promise to repair or replace certain elements of the home, if necessary, within a certain time. According to the Federal Trade Commission, the nation’s consumer protection agency, if you’re considering a home warranty it’s important to understand what it covers, how to make a claim, and the process for resolving disputes that may arise between you and the builder or warranty company.  Know You Options
Are New Home Warranties a false sense of security for homebuyers?

Reviews provided by HomeOwners for Better Building of the 
following New Home Warranties available: 

  • Texas New Home Warranty 
     See examples of the performance standards contained in the adopted Texas New Home Warranty that promote bad building practices: 
    Standards tarnishing the image of a fine University
    Public Citizens – News Release
    Public Citizen Calls for 12 States to Investigate Insurers’ Use of Questionable Arbitration Firm in conection with Home Buyers Warranty (HBW)
    Public Citizen describes how CAS is co-owned by a former lawyer who was disbarred for stealing client funds and operates in apparent violation of 12 states’ laws... The letters also request investigations of the Home Buyers Warranty (HBW) companies, which insure many homebuilders and have designated CAS as the sole legal forum available to tens of thousands of Americans who buy new homes each year.  HBW has a record of denying warranty claims 86% of the time.

    Public Citizen Report - Arbitration More Expensive Than Court – So Costly That Many Victims of Consumer Fraud, Employment Discrimination Give Up. Read the executive summary of the report, click here

    2-10 Home Buyers Warranty (HBW)
    An overview of the lies, corruption, and disrespect of a corporation

    HBW is a member of the BBB (Better Business Bureau).  You can find additional information on the company, including that within the last 36 months that 193 complaints have been filed. It is in HBW's best interest to deny, deny, deny...  Read more...
    Warranty's pay only 1% of claims
      BUILDER Magazine
    Risk Retention
    "I don't believe in them," says Ron Barney, vice president of Trend Homes, a 900-unit builder in Chandler, Ariz. "It's an appeasement to homeowners that really doesn't do anything for them. I have a problem wasting money like that." ... In fact, the warranty industry pays claims on only about 1 percent of the homes covered by such policies. "They're in the business of collecting fees and not paying claims," says Jack Dorwart, manager of Holladay Group in Lakewood, Colo., which will close about 40 homes this year--all with insurance-backed, 10-year warranties to pacify buyers. "For the types of things a homeowner wants [covered], there's always an excuse [to deny the claim]."  Even those in the industry admit their policies are limited. "Most construction defect lawsuits don't fall under warranty protection," says Wallace "Em" Fluhr, CEO of 2-10 Home Buyers Warranty (HBW) in Atlanta,  Read more...
    Homebuilding Industry Warranty Spending is Extremely Low
    New homebuilder warranty claims are low, while homebuyer complaints are at an all-time high?
    When buying an airplane, helicopter, a car, a washer or dryer, computer, printer, desk or even an office chair, the percentage of dollars spent by the manufactures on warranty issues is greater thant that spent by homebuilders on defectively built new homes. The percentage of earnings spent by a  builder on warranty issues is as little as 0.3%, while Gateway reported 6.2% and Lexmark International, spent 9.7%. Read more: Homebuilding Industry Warranty Spending is Extremely Low
    Read the entire series Warranty Week Six Part Series
    Buy a New KB Home and Shut Up
    KB Homes' Warranty is Conditional. If you need repairs you must not tell your neighbors or the news media
    Texas Lawmakers Undermine the American Dream
     Home Warranty or Builder Disclaimer?  (Birth of the Texas Home Warranty)
    Unregulated Texas Homebuilding Industry Fact Sheet and Proposed State Limited Warranties/Standards (click)
                                                        August 8, 2004
    The homebuilding industry can continue to fool the people with shoddy building practices most of the time but not all of the people, no matter the shade of the lipstick on TRCC.  Bad will be bad, no matter the cosmetic fix.  
    See TRCC Proposed State Limited Warranties/Standards And Unreasonable Exclusions

    Texas New Home Warranty Exclusions
     The Texas Residential Construction Commission (TRCC) Promotes Substandard Building Practices and Encourages Non-Compliance with Fundamental Federal Standards in the following exclusions:

    §304.2. General Provisions Applicable to all Residential Construction for New Homes,
    (b) Exceptions and Exclusions from Builder’s Responsibilities
    (1) The builder is not responsible for repair, loss or damage to a component of a home caused by or made worse by any of the following:
     (I) Change in the underground water table that exerts pressure on, seeps, or leaks under the home, sidewalk, driveway, foundation or other structure or causes subsidence or sinkholes.
    (b) Exceptions and Exclusions from Builder’s Responsibilities
    (1) The builder is not responsible for repair, loss or damage to a component of a home caused by or made worse by any of the following:
    (2) No Actual Physical Damage. The builder shall not be responsible for any condition that does not result in actual physical damage to the home, including, but not limited to the presence of radon gas, formaldehyde or other pollutants or contaminants, or the presence or effect of mold, mildew, toxic material, or volatile organic compound, unless such condition is a direct result of a construction defect.
  • Exclusions are contrary to the Code of Federal Regulations
     24CRF 200.926d (3)
    Actions give an Impression of Impropriety by the Building Industry and its Intent to Mislead Homebuyers and encourages defiance of Federal Standard
    HUD Standard
    Code of Federal Regulation: 24 CFR 200.926d (3) Construction requirements:

                (3)  Site conditions. (i) The property shall be free of those foreseeable hazards and adverse conditions which may affect the improvements, or which may impair the customary use and enjoyment of the property.  The hazards include toxic chemicals, radioactive materials, other pollution, hazardous activities, potential damage from soil or other differential ground movements, ground water, inadequate surface drainage, flood, erosion, or other hazards located on or off site.  The site must meet the standards set forth in the 24 CFR part 51, and HUD Handbook…

    (ii) When special conditions exist or arise during construction which were unforeseen and which necessitate precautionary or hazard mitigation measures, the HUD Field Office shall require corrective work to mitigate potential adverse effects from the special conditions as necessary.  Special conditions include rock formations, unstable soil or slopes, high ground water levels, springs, or other conditions which may ensure proper design, construction and satisfactory performance where these conditions are present.

    For  more information see: 
    Texas TRCC Scandal 


                Are cracks like this covered in your home warranty? 
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