Exchanging pledges and agreements are considered to be a normal aspect in all real estate transactions. Among these, the guarantees or contracts concerning the state of the house and its automated constituents are of greatest importance. For people buying a property, these warranties correspond to the fundamental security against unforeseen expenditures and renovations. On the other hand, for the sellers, these warranties signify protection from added expenses even after the ownership of a property has changed hands.
The term 'warranty' denotes an agreement between a buyer and a seller of goods or services, detailing the conditions under which the seller will make repairs or fix problems without cost to the buyer. In other words, warranty also denotes a pledge or an assurance regarding the feature, satisfactoriness, functioning and/ or value of a specific article, product or service. For instance, the warranty of an electrical device may affirm that the merchandise is free of any defect and will operate suitably if it is used cautiously and maintained properly for a specific period of time. In the event the appliance fails to perform according to the warranty, the buyer informs the seller of the problem within the stipulated warranty period. Following this, the buyer is entitled to get the device mended or substituted completely free or by paying a minimal charge.
It is important to mention that in addition to the assurance of the performance, quality or condition of a product, a warranty also promises that the seller will be obliged to respond to the buyer's notifications regarding the failure of the item to live up to the assured benchmark. Hence, a warranty has two aspects - first, it affirms that a product, in the case of real estate it is the house, will fulfill some specific criterion or promises; and second, it offers the buyer some specific rights to receive some actions from the seller, such as rectification, substitution or mending provided the assurances are not fulfilled.
When it comes to real estate transactions, there are three different types of warranties - implied, express and imposed. An implied warranty is an unwritten agreement between two parties that results automatically from Federal or state laws and are often legally enforceable. An express warranty denotes a contract, either oral or written that includes the objectives of the involved parties in words. On the other hand, imposed warranties are not warranties so much as decrees, guidelines or curbs that apply by law to the house itself.
In matters pertaining to the real estate, implied warranties are assurances for which the law will hold a builder or seller responsible despite there is no written agreement pledging anything to the buyer. Nevertheless, the implied warranties ought to be appreciated, as they can hardly ever be restricted or done away with in any agreement. Therefore, one may question what exactly an implied warranty is. As far as real estate transactions are concerned, there are three different types of implied warranties. In this case, people buying a house are able to take it for granted that the property they are buying will be built in an 'excellent and discreet' method, that the homes will be 'practically suitable' for their planned objectives and that the property will be 'suitable for human habitation'.
However, not all definitions of the terms mentioned above will be similar and, since this is an unwritten contract or understanding, different people are free to use terms that suit their requirements best. Suppose the upstairs windows do not close properly, the buyer may wonder if the house had been constructed in an 'excellent and discreet' manner. Again, if the heating system breaks down after every third week, the buyer will doubt if the property is 'practically suitable' for their planned purposes. And in case the builder has not obtained the occupancy approval from the concerned authorities by the stipulated date of settlement, the buyer has reasons to ponder if the house if actually habitable.
As discussed earlier, express warranties are assurances that are explicitly included in a written contract. For instance, suppose a seller guarantees to hand over all mechanical equipment on the property in a 'good' and 'working' condition, but the central air condition is not functioning on the day of the agreement or payment. In this case, the seller is left with two options. Either the seller undertakes the repair of the central air conditioner at his or her expense or faces a broken agreement.
It is evident from its name that an express warranty is generally avowed in simple language and is a part of the written contract. There are two reasons for including express warranties in the contract related to a real estate deal. Firstly, they may be incorporated in the agreement by the seller with a view to promote the sale of the property, or, secondly, they may be included in the contract following a demand by the buyer who is keen to protect him or her against any imperfections or troubles that may not be included either by the implied or the imposed warranties. The advantage of express warranties is that they are able to lengthen the time covered by implied warranties for maybe two years compared to one year and also offer safeguard in subjects that are usually not covered by the implied warranties - things such as sealing of the windows or the life of specific fixtures or attachments. Moreover, express warranties are also able to include take care of the losses that are normally not included in implied warranties.
In fact, the express warranties are basically important agreement articles that are expected to be incorporated by new home sellers as well as the existing home buyers. While the new home sellers are likely to include express warranties in the contracts as they want to restrict their liabilities, the existing home buyers would want to incorporate express warranties in the agreement with a view to protect them in the event of any difficulty. Irrespective of the property concerned, it is always advisable to read all express warranties carefully. This is vital as the express warranties may appear to be written in a simple language, their connotations are frequently not clear-cut. In case the phrasing, coverage, responsibilities or restrictions appear to be vague or difficult to comprehend, both the buyers and the sellers are recommended to explain in simple terms whatever they are endeavoring to say prior to finalizing the contract.
Frankly speaking, imposed warranties are less of any kind of assurance or guarantee, but are actually rules, guideline and restrains that are applicable by the law to the property itself. Imposed warranties are legislated interests and hence under normal circumstance cannot be restricted or done away with by means of contract clauses. As the imposed warranties are set up by actions initiated by the government, they vary in application as well as time from one jurisdiction or authority to another.
There is a type of imposed warranty that may come up from the local or neighborhood building regulations. The responsibility of a builder in that locality is a type of imposed warranty. In the event of the builder not fulfilling the benchmark set up by the regulations, the home purchaser has the right to sue the builder for the defects and damages in the building. As per the existing law, the buyer is able to claim as much compensation as may be required to meet the expenses of carrying out repairs in the building.
It is important to mention here that the implied as well as the imposed warranties are usually relevant only when a person is buying a new house. These warranties are not applicable in subsequent sales and purchases of a property as the previous possessors of the house may have to deal with the flaws and shortcomings that may have been caused or worsened by any pervious owner of the property. Hence, it is very important to be careful as well as ensure that a seller is not trying to sell a property that has already been used by some one else in the past as a 'new' house. There have been several cases when deceitful and immoral builders who have sold properties for brief periods to some captive buyer or someone working for them and then resold the property to others with a view to steer clear of the commitments required by the warranties.
There are other types of warranties that are associated with major domestic electrical devices, such as the heating and cooling systems in a house. In the event any damage is caused to the house or to its inhabitants or guests owing to the inferior quality of the system or defects in it, the home owner or buyer is able to sue both the builder as well as the manufacturer of the product for the damages.
On the other hand, take the instance of a leaking pipe with an inferior quality of welding during its manufacture. The poor welding results in the bursting of the pipe and if the water leaked from the pipe damages the ceiling and it collapses hurting the occupants of the house, both the builder and the manufacturer of the pipe are liable for the damage. In this case, the buyer can again sue both the builder and the manufacturer of the pipe. In fact, these are all possible owing to the extension of the law of product liability that is applicable to several appliances and articles available in the market. Incidentally, such appliances may be present in a home, but in no way linked with the building's construction process.
Unlike the implied and imposed warranties that are usually applicable only when a person is buying a new house, at times the product liability may cover the second, third or even the later occupants or proprietors of a house. In fact, anyone possessing the house at any point of time is protected by the product liability warranty. Moreover, the responsibilities for these situations cannot be done away with by means of the clauses incorporated in an agreement by the builder. The liabilities also cannot be restricted or put aside as a result of any agreement between the builder and the manufacturer of the appliances. It is important to mention here that every buyer should be aware of the fact the even if the sales agreement includes any product liability waiver, such remissions more or less do not have any consequence at any given time.
Before we conclude, it needs to be underlined that the implied, express and imposed warranties are all unconnected and different from the guarantees and regulations that are associated with the sale of land.