You have their equivalent hanging in a tight little roll on your bathroom wall. Third-party warranty companies sell their warranties to home builders. These are insurance companies who make a profit by minimizing coverage and denying claims. Just how good could these warranties be?
If you buy a $64.99 monitor from Wal-Mart you get a manufacturer’s warranty and the ability to return it to Wal-Mart within a certain period of time if it is defective. If you buy a $13,900 Kia Soul you get a 10-year and 100,000 mile bumper-to-bumper warranty, plus you are covered by both state and federal lemon laws. But, in Texas, if you buy a new house for any price you get, at the very best, a warranty that will cover nearly nothing during the first 2 years other than what is covered by equipment manufacturer warranties, and absolutely nothing of value in your 10-year structural warranty.
Don’t believe it? Let’s examine this more closely. One of the biggest selling points that a builder harangues clients with is his warranty. Many will not even allow you to view the warranty until after the initial paperwork is signed. Wonder why? Well, it’s quite simple actually. The warranty is a farce.
One of the leading warranty companies says this about what they cover if you have a foundation failure:
“A Major Structural Defect is:
1. Actual physical damage;
2. to the designated load-bearing portions of a Home;
3. caused by failure of such load-bearing portions that affects their load-bearing functions; and
4. to the extent that the Home becomes unsafe, unsanitary, or otherwise unlivable.
All four portions of the definition must be met to qualify the Home for Major Structural Defect Warranty coverage.”
Just how bad does a foundation have to be distressed in order to meet all four of those criteria? “ . . .to the extent that the Home becomes unsafe, unsanitary, or otherwise unlivable.” Pretty bad, huh? In other words, they will do nothing to repair your foundation unless you can actually no longer inhabit the house. Sad, but true.
This is the case with nearly every aspect of the house and the warranty. In addition to this lackluster coverage, take a look at the list of exclusions:
“B. EXCLUSIONS – Items Not Covered By The Warranty
The following exclusions from warranty coverage apply to any and all warranties issued by (NAME REDACTED), including Workmanship, Materials, Systems and Major Structural Defect warranties. The Home is warranted as constructed by
the (NAME REDACTED) approved Builder. (NAME REDACTED) does not warrant deficiencies or defects regardless of (a) the cause of the excluded event; or (b) other causes of loss; or (c) whether other causes acted concurrently or in any sequence with the excluded events to produce the deficiency or defect. The following are excluded from coverage under this warranty:
1. Deficiency or defects to any property, or part of the property, that was not included in the Closing Contract Price shown on the Warranty Confirmation page;
2. Off-site improvements or any improvements installed after the Warranty Start Date whether provided by the Builder or others;
3. Drainage deficiencies that do not affect the structural integrity of the Home;
4. Any and all landscaping (including sodding, seeding, shrubs, trees, and plantings) and landscaping irrigation systems including but not limited to sprinkler systems, sprinkler heads and/or sprinkler control systems;
5. Fences, boundary walls, retaining walls and bulkheads, except those retaining walls and bulkheads that contain structural or foundation walls at the Home and/or provide structural support to the Home;
6. Outbuildings, sheds, storage buildings, porches, cabanas or any other detached structures including but not limited to detached carports and detached garages (except those outbuildings which contain the plumbing, electrical, heating, cooling or ventilation systems built or installed with and serving the Home);
8. Any damage caused by soil movement, if compensation is provided by state legislation or covered by other insurance;
9. Any damage as a result of insufficient (or change in) load-bearing capacity of the soil, sub-soils or surfaces of the soil or sub-soils on a lot prepared by You;
10. Any damage caused or made worse by inadequate, excessive or uneven watering of soils within close proximity of foundations in areas with active soil; or damage by trees planted within 10 feet of foundations;
11. After the first year, concrete floors of basements and attached garages that are built separate from foundation floors or other structural elements of the Home;
12. Failure of the Builder to complete construction of the Home or any component part of the Home in conformity with construction plans or specifications or building codes or to complete agreed upon walk-through “punch-out” items;
13. Failure of the Builder, their employees, agents, or subcontractors to perform pre-closing cleanup of any kind or failure to remove any spillage, or debris from construction site;
14. Any defects or deficiency caused by materials, design, construction, or work supplied by other than the original Builder of the Home, or their employees, agents, or subcontractors;
15. Changes, alterations or additions made to the Home by anyone other than those performed under obligations of this warranty;
16. Changes of the grading of the site by anyone other than the Builder originally building the Home or their employees, agents, or subcontractors;
17. Deficiency or defects caused or made worse by owners, occupants, or guests;
18. Any deficiencies or defects in workmanship, materials or structural portions normally covered by another warranty or insurance policy whether or not paid by such warranty or insurance policy;
19. Deficiency or defects resulting from accidents, riot, civil commotion, terror attacks, war, or Acts of God; including but not limited to fire, explosion, smoke, water escape, windstorm, mudslide, erosion, hail, lightning, hurricanes,
tsunamis, falling trees, aircraft, vehicles, flood, earthquakes, sink holes, underground springs, volcanic eruptions, saturated soils or change in the level of the under ground water table;
20. Deficiency or defects resulting from burn holes, buried debris, or organic materials;
21. Any contamination caused or created by natural or man-made chemicals, compounds, or substances, or breakdown or adverse effects of chemicals, compounds, or substances used in the construction of the Home or site. Such contamination is not covered even if the Home is rendered unlivable;
22. Insect damage including termites;
23. Any damage caused by water intrusion, including but not limited to roof leaks, window sealants, plumbing or failure of vapor barriers, except as provided in the Workmanship, Materials and Systems warranty;
24. Dampness or condensation due to Your failure to maintain adequate ventilation;
25. Any loss, damages or other condition which is not a deficiency or defect of construction;
26. Consequential Damage: Any property damage or bodily injury which follows as a result of structural damage, or other defects covered under this warranty including defects in plumbing, electrical, heating and cooling;
27. Normal wear and tear or normal deterioration;
28. Cost of transportation, food, storage, moving contents, shelter, or other incidental expenses related to Your relocating during repair;
29. Any loss or damage which may arise while the Home is not being used primarily for residential purposes;
30. Any loss or physically inflicted damage which is not a construction deficiency or defect, including but not limited to chips, scratches, and dents in materials, fixtures, appliances, or other types of equipment;
31. Failure by You to give notice to the Builder and/or BBWG of any deficiencies or defects within a reasonable time or as specified in this warranty;
32. Negligence and/or improper maintenance or improper operation of items warranted under this warranty;
33. Failure of You or anyone to comply with the warranty requirements of manufacturers of appliances, equipment or fixtures;
34. Any loss or damage which You have not taken reasonable timely actions to minimize;
35. Any dispute received by (NAME REDACTED) later than 30 days after the applicable Warranty Expiration Date for claimed items of deficiency or defect;
36. Any alleged deficiency or defect for which there is no evidence of deficiency or defects at the time of the claims investigation; or which has been repaired prior to a (NAME REDACTED) claims investigation unless such deficiency or defect is considered by (NAME REDACTED) to be an emergency repair which was repaired by You after the Builder failed to respond within a reasonable time. Emergency items will be determined by (NAME REDACTED) considering imminent danger of resulting damage to the Home. Emergency items will not include items of comfort to You such as but not limited to problems with air conditioners;
37. Any condition which does not result in actual physical damage to the covered Home;
38. Diminished market value of Your Home.”
While many of the above items may sound reasonable when they relate to deferred homeowner maintenance, what is not said is more important. If the builder constructed the house in such a manner so that it was not code-compliant you may be liable for his sins. One example is that the builder does not properly grade the soil to provide positive drainage around the foundation perimeter. The foundation fails due to this lack of proper drainage. Even though you did nothing to cause this, you will be held responsible for not maintaining the proper grading and drainage, thus making your already lame foundation warranty void.
In almost every circumstance these useless warranties are written so that the myriad of defects which arise during the warranty period will not rise to the level of distress required for the warranty company to take any corrective action.
How To Avoid Being (Completely) Screwed When Buying A New Home in Texas
When purchasing a new home from a Texas home builder, you are entering a veritable mine field from which you will not escape totally unscathed, all prudent preparations on your part notwithstanding. Regardless how intelligent, street smart, savvy, or tough-minded you envision yourself to be, you are outgunned from the start. Your opponents are corporate production builders who spend more money on lobbying the Texas legislature than nearly any other group. The laws regarding home building are written to protect them – not you. Unconvinced? Let’s take a closer look.
When a conflict arises from your learning that your builder is shoddily constructing your new home (which is inevitable), you have little viable recourse. All builders’ contracts contain a clause that limits your legal action against them to binding arbitration. This is an expensive process that is heavily weighted in the builders’ favor. The arbitrators are always from the American Arbitration Association. This group is in close affiliation with the National Association of Home Builders (NAHB). From their site: “As the provider of choice for dispute resolution services, the AAA through its National Construction Dispute Resolution Committee (NCDRC), has worked closely with the industry to develop the Construction Industry Arbitration Rules and Mediation Procedures and other project specific approaches to prevent and manage conflict.” These rules are written by the builders and for the builders.
The building codes adopted by the various municipalities in the state of Texas are based upon those authored by the International Code Council (ICC). While, at first blush, appearing to be an independent code-authoring organization, further investigation reveals undue influence from the NAHB. Just one glaring example is that, from its inception in 2000, the ICC’s International Residential Code stated its purpose in 101.3 as “The purpose of this code is to provide minimum requirements to safeguard life or limb, health and public welfare.”
Now let’s watch the changes that occurred in 101.3 during subsequent versions.
The 2003 version states, “The purpose of this code is to provide minimum requirements to safeguard the public safety, health and general welfare, through affordability, structural strength, means of egress facilities, stability, sanitation, light and ventilation, energy conservation and safety to life and property from fire and other hazards attributed to the built environment.” This is an improvement. The 2006 version states exactly the same. All is well so far.
The 2009 version introduces a fly into the ointment: “R101.3 Intent. The purpose of this code is to establish minimum requirements to safeguard the public safety, health and general welfare through affordability, structural strength, means of egress facilities, stability, sanitation, light and ventilation, energy conservation and safety to life and property from fire and other hazards attributed to the built environment and to provide safety to fire fighters and emergency responders during emergency operations.” Now, the minimal building code, which is the worse way one can legally build a house, hinges upon affordability and not safety. And, the picture gets even more bleak.
Municipal Building Inspectors
When a municipality in Texas adopts a building code it becomes and has the force of law. The municipal building inspectors are tasked with the job of enforcing this code, or are they?
In IRC 104.1, we find, “The building official is hereby authorized and directed to enforce the provisions of this code . . .” So far, it sounds like the onus is on the building official to enforce the building code. But wait.
The rest of that citation goes like this, “. . . The building official shall have the authority to render interpretations of this code and to adopt policies and procedures in order to clarify the application of its provisions. Such interpretations, policies and procedures shall be in conformance with the intent and purpose of this code. Such policies and procedures shall not have the effect of waiving requirements specifically provided for in this code.”
That still sounds like the building official must enforce the spirit, if not the letter, of the code. However, on January 19, 2005, Greg Abbott, Attorney General of Texas (yes, the same bozo that would have you elect his sorry self for governor) rendered a rather specious opinion on the matter that concluded with this, “Local Government Code section 214.212(c)(1), which permits a municipality to adopt local amendments to the International Residential Code, does not limit the municipality to adopting only local amendments that are equivalent to or more stringent than the standards of the International Residential Code.” In other words the municipal inspectors can do as they please. The building code be damned.
Remember that the building officials work for the corporations that are the municipalities. It is their job to protect that corporations and not you. They are also stuck between the developers wanting to build in their jurisdictions and the politicians they work for. So who will be on your side?
Hire an attorney before you sign any paperwork with any builder. Not just any attorney will do. Your run-of-the-mill, paper-shuffling bar-passer will not suffice. You need an attorney who is experienced in dealing with builders and their contracts. If you need a referral, contact me.
Strike the binding arbitration clause. Add to the contract that your builder shall repair everything that your third-party inspector finds to be in conflict with the letter and spirit of the adopted building codes. You should also insist that the builder supply you with a complete set of the construction documents (blueprints). Do not fall for his story about them being copyrighted. While they are indeed copyrighted, the copyright only prevents you from selling the plans or using the plans to build a house, it does not prohibit your possessing a set of plans to the house you have bought. As the owner of the home your possession of the plans would fall under the doctrine of fair use.
Hire a competent home inspector. The minimum requirements for this inspector are, (1) Significant prior home construction experience, (2) International Code Council certification as an R-5 Combination Residential Inspector, (3) Licensed by the Texas Real Estate Commission or the Texas Board of Professional Engineers.
Grow a set of cojones. Take charge of the project from the outset, stay on top of every phase of construction, and do not succumb to the builder’s bullshit and outright lies. Take no prisoners. Make no mistake. This is an adversarial relationship you are entering into with your builder. He is not your friend.
If you follow the three steps above you will not end up with a perfect house. You will also not be on the receiving end of quality construction. These are unattainable goals in the current Texas home building milieu. You will, however, be in charge of an otherwise uncontrollable process that will result in a substandard house replete with defects.
Questions to Ask Your Home Inspector or Things Your Home Inspector Won’t Tell You
While the Internet can be useful when searching for some types of information, it should come as no surprise to anyone that it is also rife with misinformation. The term “to google” is, after all, synonymous with to search, and not to research. It is a good search tool and not so good when relied upon as a sole research method.
If you feel that you have done your due diligence by googling what questions to ask your prospective home inspector, think again. Bullshit is prevalent in our society. By bullshit I mean misinformation that is not exactly a lie and certainly not the truth. It is misleading nonsense used to further the writer’s or speaker’s agenda.
If you google “questions to ask your home inspector”, “things your home inspector won’t tell you”, or the like, you’ll be up to your ears in search results from any number of groups with vested interests in selling their positions or products. These will run the gamut from groups like Zillow/Trulia, real estate brokerages and agents, new home builders, mortgage lenders, the bought-and-paid-for main stream media like CNN, Fox News and MSNBC, brain-dead bloggers, forums populated by the over- and under-medicated, etc. ad infinitum. Most of these have simply either found a list of questions and outright plagiarized it or have lightly edited it and called it their own. In other words, the lists you find, by and large, will be merely regurgitated bullshit, and not even the original stuff.
But, enough about the misinformation; how does one find useful information on this subject? Glad you asked. Perhaps a useful way to approach this is to simply make a list of the most common misconceptions floating about in cyberspace, and address each of them head on. For the sake of both brevity and clarity I will handle each of these as they pertain to home inspections within the state of Texas, where I am intimately familiar with the territory and laws. I will also limit the list to the ten questions I most commonly am asked.
Q1: What does your home inspection cover?
A1: Home inspections in the state of Texas are governed by the Texas Real Estate Commission (TREC). While this may appear to be (and certainly is) tantamount to the fox guarding the hen house, it is nevertheless how those folks in the capital of Austin repay us for electing them. The TREC has adopted a set of standards for home inspectors, which includes a detailed list of what must and what must not be inspected. This list can be found at: http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTAC?tac_view=5&ti=22&pt=23&ch=535&sch=R&rl=Y
This is the minimum standard for a Texas home inspection. Said differently, it is the worst way a home inspection can be legally performed. While a few highly-qualified inspectors, such as this author, may exceed this standard, most do not. Many are either unwilling to meet, or incapable of meeting this standard.
Q2: How many home inspections have you performed?
A2: While this is essentially a good question, the person asking it will likely have no idea of what a good answer might sound like. The American Society of Home Inspectors requires 250 inspections for its certified members. While that may sound like a lot, it is not even enough to begin to get the drift of inspecting a house. The state of Texas has no such requirement. Once licensed, you are good to go ahead and begin on-the-job training while inspecting houses for unsuspecting buyers. My opinion, based upon 18 years experience in the field, is that, after completing 1000 inspections, an inspector may just begin to think of himself or herself as minimally competent.
Q3: Will you climb on the roof?
A3: Without first seeing the roof, this is not possible to answer. There are many roof surfaces that are not safe to walk on and should not be walked on by anyone but a certified roofing contractor wearing the proper OSHA-required fall protection gear. Certain roof surfaces, such as slate, faux slate, clay tiles, standing-seam metal, old, worn asphalt shingles, etc. are not safe to walk on. Additionally, asphalt roofs should not be walked on during the extreme temperatures we experience during North Texas summers. Most inspectors do not carry or use ladders in excess of 18 feet in height. This may not be sufficient to safely reach the lower roof surface. Even it is, the upper roof surface may be out of safe reach. Most roofs can be properly inspected from a ladder at the eaves and with binoculars from the ground. Roof surfaces with excessive pitches (>6/12) are also unsafe. No inspector in his right mind will risk his life to inspect your roof. It may be interesting to note here that even professional roofing contractors will often not mount a roof to give a replacement estimate. They use http://www.eagleview.com/ .
Q4: Do you use an infrared camera?
A4: This is one is especially exasperating to me. Infrared cameras measure heat differences translated to a digital screen to form a picture. These are sometimes useful during home inspections under the ideal conditions. While they are just another tool in the box, many inexperienced inspectors hard-sell their use to prospective clients because the clients do not fully understand what the cameras are capable of and the inspectors have no other skills to hawk. It makes more sense to ask the inspector if he uses a flashlight, ladder, electrical meter, moisture meter, et al. These tools are more often employed. Let us put this into perspective. Would you consider asking your doctor if he uses a stethoscope, thermometer, blood pressure cuff, MRI machine, etc.?
Q5: How long will the inspection take?
A5: Without seeing the condition of a house it is infeasible to predict with any degree of accuracy how long the inspection will take. On relatively new houses, a range of 1.5 to 2 hours should be reasonable for a highly experienced inspector. It is also possible to spend 3-4 hours on a 2000 s.f. house that is a poster child for materials/systems atrophy and deferred homeowner maintenance, or a flipped (investor’s) house (lipsticked pig).
Q6: How much will it cost?
A6: This is typically the first question asked. It is always an indication to me that the caller has done no research. My fees have always been listed on my website. Most inspectors do not post these so that they can adjust their fees according to time available, house location, etc. Fees vary widely from area to area. They are generally higher in the large metropolitan areas. Generally speaking, the minimum fee for a competent inspection in my area will be somewhere in the range of $450. Those asking less are usually lesser qualified and unable to demand the going rate.
Q7: What type of report do you provide and when will I receive it?
All inspections performed on substantially completed houses must be reported on this form.
The TREC requires that inspection reports be delivered within 3 days. This is unreasonable. Most inspections happen during a short option period. Inspection reports should be made available on the same day as the inspection. One caveat here is that on-site inspection reports usually indicate that your inspector is a minimalist. There is no reporting system available for portable computers or mobile devices that can substitute for a well-researched and documented report. Any report that is under 60 pages in length is less than fully informative.
Q8: Can I attend the inspection?
A8: This question should never be asked. Assume that you will be attending the inspection. Also assume that you should leave the inspector to perform his observations and draw his conclusions prior to his discussing his findings with you. Inspectors who allow you to “tag along”, and perform a walking tutorial with you while inspecting the house are practicing what is tantamount to texting while driving. Nothing good will come of it.
Q9: Are you familiar with the area in which the house is built?
A9: This assumes that houses are somehow significantly different than others. This is simply not the case. With a few exceptions such as extremely custom modern homes, over-the-top eccentric homes, or extremely old historic homes, all homes are essentially built the same way and of the same materials. Some people like to think that the houses they are considering buying are unique. This is almost always not the case.
Q10: Do you carry professional liability (errors and omissions) insurance?
A10: All licensed inspectors in the state of Texas must carry professional liability insurance as a prerequisite to licensing or license renewal. If you understand what this insurance is you will see that this is a stupid question. Professional liability insurance simply provides the inspector with an attorney should you choose to sue him. You get to hire your own. It provides no benefit for you.
Now, let’s take a peek at some of the questions I would ask, if I were hiring a home inspector. Brace yourself. They will be quite different that the list above.
Q1: Have you ever built any houses? If so, how many? What was your role in the home building process?
Comment 1: A person who has built several houses possesses an intimate knowledge of their materials, systems, structure, function, et al. that cannot be replicated through classroom experience. Driving by a new house under construction or sweeping the floors behind the construction crew in a house being built does not count. Being the general contractor or builder only counts if you actually took an active part in the construction, i.e. sawed wood, hammered nails, etc. Riding around in an oversized. noisy pickup truck and writing checks to subcontractors does not make one a builder.
Q2: What certifications do you hold pertinent to inspecting houses?
Comment 2: A home inspector license is not a certification. It is merely a license to do business. Certifications are available from many organizations. The most relevant are those provided by the International Code Council (ICC). At a minimum, any inspector should hold an R-5 Combination Residential Inspector certification from the ICC. Beyond that there are others available from the Post-Tensioning Institute, the National Fire Protection Association, et al. Note that serving as some type of officer in this or that inspector organization is an affiliation and not a certification. It is an indication that the officer is politically motivated and has way to much time on his hands. It has absolutely no bearing on knowledge of the profession.
Q3: How many real estate agents or brokers refer you on a regular basis?
Comment 3: Most home inspectors rely solely upon referrals from real estate agents and brokers who have a vested interest in finding few if any problems with a house. This unduly influences and severely limits your inspector’s judgment when reporting adverse conditions to you. The answer to this question should be very few or none.
Q4: Are you a sole proprietor or a member of a multi-inspector firm? Are you a franchisee?
Comment 4: Competent professional inspectors find it a challenge to find enough business while attempting to compete with the agent-pleasers (ass-kissers). The ability to procure sufficient business to keep several inspectors employed is one sure sign of an inspector that is tied at the hip with brokers and realtors. Franchisees are usually those who are too inept or shiftless to properly build a business from the ground up. They believe that one can purchase credibility by buying into a franchise scheme.
Q5: Do you carry general liability insurance?
Comment 5: General liability insurance is not required for Texas home inspectors, but is a must in order to protect home sellers and buyers alike.
Q6: How many continuing education hours do you obtain annually?
Unfortunately, the TREC approves only education vendors who are willing to pay them to be approved. Most of the better and relevant CEU courses available for other professionals such as building inspectors, engineers, architects, and builders are not approved the TREC. Go figure.
Inspectors at the top of their game usually obtain >30 CEU hours annually.