Hello. The builder of a new house that my parents want to buy says that he will purchase a 10 year structure and systems warranty and a 1 ye...

Question

Hello. The builder of a new house that my parents want to buy says that he will purchase a 10 year structure and systems warranty and a 1 year warranty plan selected by them for about $2,000. He wants it in their written offer to him that at the close of escrow they will reimburse him. Could this be a disadvantage for my parents? Also, should they make sure not to sign "As Is" so that the implied warranty will not be void? What are you thoughts on signing warranty documents at closing? Thanks.

Answer

I cannot think of any possible reason for anyone to reimburse the builder for what amounts to insurance the he will meet his obligations under the Civil Code. A buyer may or may not want to buy insurance (although they are couched in the terms of warranty, they basically amount to insurance) to protect them in the event the builder is out of business or financially unable to answer for any latent defects that may cause problems over the next one or ten years, but that is the buyer's decision to make, not the builder's. Likewise, there is absolutely NO reason to sign an "As Is" agreement on new construction. It is most likely unenforceable but even asking for it is a HUGE red flag that the builder is seriously shady. If the builder refuses to stand behind his work for even a year, without the buyer paying to insure it won't cost him anything, you have a highly questionable builder.