California law makes the sellers responsible for the condition of their home and any undisclosed defects for one year. Banks and lenders are exempted from these rules and will require a buyer to be extra diligent in order to avoid buying a home
that will cost thousands of dollars in additional repairs.
Sellers are liable for in civil court for three years .... if they knowingly refuse to disclose a defect that affects the condition of the property. In addition to civil penalties the court may impose, the sellers (in extreme circumstances) can be charged with misdemeanor criminal charges if the liability results in a injury or death of another.
Therefore it is in the best interest of the seller to offer to pay for the first year of coverage. The annual cost is $300-$500 depending if there are any “riders” added to the basic coverage.
All parties benefit from the home warranty policy. A seller can simply hand over the keys and their liability at the close of escrow.
Agents benefit because the buyer isn’t contacting them at all hours of the day and night while threatening small claims action over every real or imagined property defect.
Buyers benefit by prompt resolution of any property matter that may arise without warning.
What is a home warranty policy?
A home warranty policy protects homeowners against the cost of repairs or replacement of their appliances that fail with normal wear and tear.
What are the differences between home warranty and homeowners insurance?
Homeowner’s insurance is hazard insurance. This policy insures items damaged by fires, water, wind vandalism etc.
A home warranty repairs or replaces items that break down through normal wear and tear.
What are the Policy Limits?
Typically policy limits are set at $1,500 per contract item for diagnosis and repair or replacement.
Does it matter when the home was constructed?
No.
Is a home inspection required to enroll?
Yes.
Who conducts the repairs?
Typically “independent contractors” respond to repair calls, hired by the warranty company.
Is there a service fee for each visit?
Yes. Typically the fee is $45. The repair work is guaranteed for 90 days.
Is the policy renewable?
Yes.
When does coverage begin?
Coverage starts 30 days after the application is finalized and continues for 1 calendar year thereafter.
What’s covered?
PLUMBING SYSTEM --- COVERED (includes) Slab leaks and water line breaks. Warranty company for diagnosis or elimination of mold, mildew and fungus.
WATER HEATER --- COVERED
SOLAR WATER HEATERS - Solar components --- NOT COVERED
HEATING SYSTEM --- COVERED (additional rider for A/C).
ELECTRICAL Wiring and “Fuse Box” --- COVERED
DOORBELLS - BURLAR ALARMS --- NOT COVERED
CEILING FANS --- COVERED
DISHWASHER --- COVERED
GARBAGE DISPOSAL --- COVERED
BUILT-IN MICROWAVE OVEN --- COVERED:
OVEN --- COVERED
REFRIGERATOR/FREEZER --- COVERED
ICE-MAKERS, CRUSHERS, DISPENSERS --- NOT COVERED
GARAGE DOOR OPENER (motor) --COVERED
Please note: The Door Itself - Hinges -Springs – Remote transmitters -- NOT COVERED
CLOTHES WASHER --- COVERED (additional rider)
CLOTHES DRYER --- COVERED (additional rider)
POOL AND SPA --- COVERED (excludes “above ground” pools and spas) Both pool and built-in spa equipment (exterior hot tub and whirlpool when additional fee is paid).
ROOF LEAK REPAIR --- COVERED (SFR Only)
ROOF LEAKS (Repair over the occupied living area only) --- COVERED (Additional rider)
ROOF Partially or completely replaced --- NOT COVERED
Home owner will be charged for the disposal of the broken appliances and hazardous materials.
The warranty company is not responsible for restoring wallpaper, floor coverings, cabinets, counter tops or floor tile.
INSURER reserves the right to provide cash back in lieu of repair or replacement.
Is coverage transferable to a new owner?
Yes. But typically there is a $50 cancellation fee assessed if the contract is terminated before the one year is up.
Copywritten April 2007…Daniel Dobbs,Broker