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Before You Buy

Too many homeowners approach the purchase of a house with little information about their rights and remedies. First, purchasers of new homes should confirm that the builder has a comprehensive general liability insurance policy. That policy should cover sums necessary to repair construction defects. Ideally, the homeowner should insist that the subcontractors are also insured. Unless the dwelling is a custom house, however, this is usually not possible. A homeowner should verify that the general contractor has all requisite licenses.

Many builders attempt to exclude the very powerful implied warranty of habitability by placing disclaimers in their contracts. Additionally, they provide so-called warranties from insurers like HW 10, RWC, or HWC. Many are hardly worth the paper they are written on. If possible, the homeowner should reject any contractual language which excludes the implied warranty of habitability. In order to evaluate the effect of language which appears to disclaim legal warranties, you should contact a lawyer licensed to practice in your jurisdiction. Nor should the homeowner count on the "paper" warranties to provide meaningful remedies.

Home buyers should also be wary of arbitration clauses in their contracts with the builder. Arbitration is usually disadvantageous to consumers. Homeowners should use all efforts to preserve their right to a trial by jury in the event they cannot resolve their differences with the builder.

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