A majority of new houses and condominiums planned in the District over the next year are expected to be covered by 10-year warranties under a plan set up by the National Association of Home Builders, organizers of the warrantly program said.
This week, the Home Owners Warrantly Corp., which already operates in 44 states, including Maryland and Virginia, licensed eight builders to offer the warrantly. Earnest H. Leming, who is president of Lem-Co Inc. and the newly formed HOW Council, predicted that three-quarters of all new houses and condos under construction or planned in the next year will be covered.
Builders, who must qualify financially, technically and ethically to get a licenses, guarantee every house for workmanship and materials and against structural defects for one year. The performance level of the plumbing, heating, electrical and airconditioning systems is assured for a second year, and the owner is also protected against structural defects. The initial cost of the warrantly is absorbed by the builder, whose warrantly is insured.
After two years an insurance company takes over the warrantly, insuring the home against major structural defects for eight years. The coverage remains in effect even if the house is sold within the entire 10-year period.
In case of dispute between builders and owner over unresolved defects, a conciliation group takes over. If this group-made up of volunteers from the community and business as well as other builders-are unable to settle the issue, then the parties agree to submit to binding professional arbitration. Until such as mechanism was set up, dissatisfied owners had only alternative- which they still retain-to go to court.
The HOW program began in this country in 1972. It now has 9,000 participating builders and 340,000 houses enrolled. It has settled 1,200 builder-buyer suits out of court. In less than two years 45 builders (and 13 subsidiaries) in Maryland have been licensed. Last year 3320 homes in suburban Maryland, or approximately half those constructed, were warrantied. The number is even larger for Virginia, according to Leming.
The reason the warrantly program is so late in coming to the District, he said, is the relatively small amount of new construction until recently. The break-even point for such a program is 800 units; the District HOW warrantly program will begin with almost double that numer.
Leming estimated that only 10 to 15 percent of the houses being built in Washington are new; the rest are being rehabilitated. (HOW coverage does not apply to rehabilitation.) But with new construction picking up, Leming estimates that the number of builders licensed to offer warranties will increase.