warranties: Good or good-for-nothing?|
"They should read the extent
of their coverage so they know what is covered and what is not," he says.
"A warranty is not necessarily going to provide them with a perfect product.
A warranty is going to provide them with product that is acceptable under certain
professional construction industry standards or guidelines," he says.
a copy in advance of your closing and go through it step by step. If there is
anything you don't understand, call your attorney or the closing attorney and
get a thorough explanation.
Questions to ask:
you deal directly with the builder or do you now have to go through a third party?
- Do you retain the right to sue if there are significant problems or are
you giving up that right in favor of binding arbitration?
- Does the contract
limit the builder's liability if there is a problem?
many times, buyers don't see the warranty until closing and have no idea what's
in it, says Nancy Seats, president of Homeowners Against Deficient Dwellings,
a grassroots consumer advocacy group. And many of the contracts are "written
in legalese," she says.
Her advice: "Read the exclusions
very carefully and really think about the implications of those exclusions."
mandatory binding arbitration clause is included in many warranty contracts and
is an important point to consider.
Builders say it's a great
way to limit court time and costs. "It's a better way of getting matters
resolved," says Crump. "It cuts to the chase and does so less expensively
and more expeditiously."
But some consumer advocates believe
the arbitration process favors the builders, especially if the builder regularly
uses the same arbitration service and names a specific arbitration company in
"You do not want an arbitration service
that gets repeat business from your adversary," says Calvin "Kelly"
Vance, a Spokane, Wash.-based lawyer who specializes in construction defect and
real estate cases.
Other points to note are appliance replacement
clauses and liability-limitation clauses that limit the amount you can collect
if there's a problem.
Many appliance replacement clauses state
that if the appliance cannot be repaired the company will replace it at little
or no cost to the homeowner. The problem there comes in an interpretation of what
"unrepairable" means. Is your washing machine considered repairable
if an obsolete part from Taiwan is needed and it may take six months to come in?
It can be costly to leave this open-ended. Ask the company to explain in writing
the criteria for determining if something cannot be repaired before you sign.
If you see stipulations in the warranty that bother you, like
mandatory binding arbitration or a liability limitation clause, alter the contract,
says Ahmad. "Strike them out. Say, 'Do you have a problem with that? Why
do we need a limiting warranty that limits the builder liability?'"
bottom line, says Ahmad, if a warranty seems restrictive or unfair, don't sign
it. "I think consumers need to say, 'No, I'm not accepting your warranty.'"