Scrutinize Home Warranties For New And Resale Homes by Broderick Perkins Buying a new home warranty in California is much like buying an extended warranty on cars and appliances if they are of questionable value because civil remedies are already in place to handle defects. In California, most builders provide industry-standard new home warranties, but state law allows you to sue builders for general defects for up to four years after the home is constructed. Under the civil code you can also hold builders liable for latent (those not easily detected) defects on major components for up to 10 years. Home warranties on resale homes are just as questionable. The Home Warranty Association of California (HWAC) offers consumers a checklist to make sure they don't get taken. At the top of the list is checking in with California's Department of Insurance, which regulates the industry. "With sales of home warranties for existing homes in California on the brink of exceeding historically high levels, prospective buyers and sellers can call the department to learn whether a particular home warranty company is in compliance with their regulations," said Dan Langston, president of HWAC, which establishes guidelines, but only for member companies to assure they are licensed and abide by a strict industry code of ethics. Ray Brown, co-author of "Home Buying For Dummies" (IDG Books, $16.99) says warranties for resale homes may be as useless as those for new homes. Typically, home warranties include standard coverage of the home's heating, electrical and plumbing systems, as well as kitchen appliances, such as a range, oven, dishwasher and disposal. Air conditioners, pool/spa equipment, well pumps, solar components, and even limited root coverage may be available for an additional premium. Brown says warranties are often offered by the seller, but buyers shouldn't accept one without first having the home fully inspected to determine its condition. If the seller wants to pay, fine, but think twice about footing the bill. "After spending $250 or so for the plan, you'll pay an additional $25 to $50 each time you need someone to come out and look at a problem," says Brown. The plans also limit how much they'll pay to correct major problems. "Hiring a professional property inspector to inspect the home diligently and uncover all existing problems, so that you can negotiate their correction with the sellers, is a better way to spend your money," says Brown. Still, the plans are popular. Eight out of 10 existing home sales in California include a warranty, according to HWAC. HWAC offers consumers the following suggestions when searching for a reputable home warranty firm: Ask friends, family, co-workers, real estate professionals, associates and others you trust for a referral to a company they've recently used and were satisfied with the service. Shop for key items including, price, service fees, coverage and company stability. In California, the cost of basic coverage can range from $220 for a mobile home or condominium to $245 for a single-family residence under 5,000 square feet. Service fees for trade calls may range from $35 to $100, even higher than Brown indicated. Be certain your coverage is compatible with the type of home you are about to buy. Warranties on older homes could require code upgrades before coverage is effective. Ask prospective companies how much they hold in reserve for claims. A viable company holds forty percent or more of premiums collected on active contracts sold in a given year. Send any complaints to California's state insurance department. | 
