When May a Home Warranty Be Purchased?
Understand the diverse timing and circumstances under which a home warranty can be acquired for any property.
A home warranty is a service contract designed to cover the repair or replacement costs of specific home systems and appliances that fail due to normal wear and tear. This contract is typically valid for a set period, often one year, and aims to protect homeowners from unexpected expenses. Understanding when and how to acquire such a contract is important for property owners and those involved in real estate.
Purchasing During a Real Estate Transaction
The process of buying or selling a home frequently presents opportunities to secure a home warranty. Buyers often consider purchasing a home warranty when buying a home, typically coordinating this around the closing period. This can involve a direct purchase by the buyer, or it may be negotiated as an inclusion within the sale agreement. Many buyers choose to bundle a home warranty with their closing costs, ensuring coverage begins shortly after they take possession of the property.
Sellers also commonly provide home warranties, either as an incentive for potential buyers or to mitigate potential issues during the listing period and after the sale. A seller might activate a warranty when listing the home, allowing them to utilize its benefits for repairs while the property is on the market or in escrow. If a covered item breaks down before the sale closes, the seller can use the warranty to address the issue, paying only a service fee. This seller-provided coverage can then transfer to the buyer at closing, offering the new homeowner immediate protection.
In these scenarios, the purchase of a home warranty is closely tied to the real estate transaction’s timeline. The policy often becomes effective at the close of escrow, providing continuity of protection as ownership transfers. While not legally mandated, including a home warranty can be a strategic element in negotiations, offering reassurance to both parties. This connection to the sale process makes it a common and often convenient time to secure a home warranty.
Purchasing for an Existing Home
Homeowners not actively engaged in a real estate transaction can also acquire a home warranty for their home. An existing homeowner can purchase a home warranty at any point during their ownership. There is no specific event, such as a home sale or purchase, that must trigger the decision to obtain this coverage.
Homeowners might opt to buy a home warranty many years after initially acquiring their home. The timing of this purchase is flexible, allowing them to secure protection when they deem it appropriate. This provides an ongoing opportunity for property owners to manage the potential costs associated with system and appliance breakdowns.
This flexibility ensures that home warranty coverage is accessible beyond the initial home buying phase. Whether a home is newly purchased or has been owned for an extended period, a home warranty can be purchased to safeguard against future repair expenses. The ability to purchase a home warranty at any time offers a continuous option for financial protection related to household systems and appliances.
Other Purchase Scenarios
Beyond real estate transactions and general existing home ownership, other specific situations influence when a home warranty might be acquired. New construction homes typically come with a builder’s warranty, which covers workmanship and materials for a set period. A separate home warranty can be purchased to supplement this coverage, particularly after the builder’s warranty expires, or to cover items like appliances that a builder’s warranty may not include. This allows homeowners to extend their protection once the initial builder’s warranty concludes.
Existing home warranty policies are generally annual agreements that can be renewed. This renewal process ensures continuous coverage without a lapse. Many providers offer automatic renewal to prevent gaps in protection, or homeowners can manually renew to review and adjust their plan. The renewal period typically occurs a few weeks before the current contract expires, allowing time for evaluation.
After a home warranty is purchased, there is often a waiting period before coverage officially begins. This waiting period typically ranges from 30 to 90 days, depending on the provider and the specific plan. The purpose of this waiting period is to prevent claims for pre-existing conditions. However, some companies may waive or shorten this period for policies initiated during a real estate transaction where a home inspection has occurred, or for renewed policies.