Q&A: Complying with statutory warranties on remodeled homes
I occasionally buy older homes that need a lot of work. I remodel the homes and sell them for a profit. I heard that the Legislature made some changes that place the responsibility of complying with the statutory warranties concerning new homes on me. Is this true?
People who buy homes, remodel them by making a material improvement, and don't live there for at least one year following the completion of the remodel are responsible for the statutory warranties for the remodeling work in the same way a builder or remodeler is responsible for the warranties. This is true even though the owner is not required to register as a builder.
The key issue here is whether the person buying the home makes a "material improvement" to it. A material improvement is a modification to the home that changes the square footage of the living area and also modifies the home's foundation, perimeter walls, or roof. A material improvement does not include modifications that are designed primarily to repair or replace the home's component parts. So, if you occasionally buy a distressed home and remodel the home by making a material improvement, you would be responsible for the statutory warranties for the remodeling work in the same way that the remodeler or builder is responsible even though the you are not required to register as a builder.
Note that the contractors that you may use to remodel the home will provide at least the statutory warranties to you in the contracts that you use to engage the contractors. You could have the warranties transferred to the buyer, but you would still be responsible for the statutory warranties to the buyer in the event the transferred warranties were not honored. Additionally, there are third-party warranty companies with whom you can contract to provide and administer warranties to a buyer that cover the statutory warranties of the remodel. For more information concerning the statutory warranties, visit the Texas Residential Construction Commission's Web site.
This information is brought to you as a public service of the The HBH Group Realty Team with Keller Williams Realty. You may learn more about us at our websites located at: http://www.TheHBHGroup.com/ and http://www.TheHBHGroup.biz/ or contact our offices at (512) 439-3772 or toll-free at (877) 268-1877.
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Wow, pretty useful information.
I bet a lot of "flippers" did not realize this.
Thanks
Thanks, Steve - That's what I thought. We don't currently have a statute like that in Kentucky, but you never know, it could be on its way.