The information is from the CCB newsletter that explains important rights affecting the homeowner taking possession of new construction in Oregon.

In a past article I mentioned the new residential structures warranty law, and that it was my opinion that the law was being poorly drafted for purposes of clarity and for the protection of homeowners rights. While some additional clarity has been advanced since my first article, my opinion remains substantially the same.

Contractors that enter into a contract to build a new residential structure on or after July 1, 2008, must make a written offer of warranty to the owner or first purchaser, which covers defects in materials and workmanship for the structure (ORS 701.320).

This law does not apply to manufactured dwellings.

The following questions and answers explain a contractor’s obligation under the new law. You may wish to consult an attorney for advice on how this applies to your construction business, or to you as a prospective new home purchaser.

What is a “warranty?”

A warranty is an obligation by the seller that the seller’s product (here, a new home) is free from defective materials or workmanship performed, together with a promise to repair or replace the defective items and faulty work. A warranty is not a guarantee. Repair or replacement is satisfied by meeting building industry standards- there does not need to be complete customer satisfaction. A warranty does not cover items that arise from customer neglect.

What does a typical new home warranty cover?

A new home warranty typically covers: *Structural defects: Warrants against failure of structural components such as the load-bearing elements of the home. *Major home system failures: warrants against failure of plumbing, electrical, heating, and air-conditioning systems. Also warrants against failure of major appliances, such as refrigerators, dishwashers, ovens, and stovetops. *Workmanship: Promises to repair defects in work performed, such as installation.

All warranties are contracts. The terms of the contracts will vary. Some warranties, for example, cover only major home systems. Others provide limited coverage for all of the listed items. Still others exempt certain products or installations. Some warranties allow for the purchase of optional, additional coverage. Any warranty contract satisfies the new law.

Who must supply the warranty?

Although the contractor must offer a warranty, the contractor decides whether to supply the warranty directly, or through a company that sells warranties. A direct warranty is a contract between the contractor and the new owner or purchaser. A purchased warranty is a contract between a company that sells warranties and the owner or purchaser. Either warranty satisfies the new law.

What period of time must the warranty cover?

The law does not require a specific time for warranty protection. A typical new home warranty protects against structural defects for five to ten years and promises to repair or replace major systems for one to two years.

The contractor may select the time period the contractor feels is appropriate for the warranty.

How much can the contractor charge for the warranty?

The law does not set any limit on the amount that a contractor may charge for the warranty. Typically, new home warranties purchased for warranty companies run around $250.-$500. There may also be a service fee, like a deductible, which the homeowner pays when requesting service. A typical service fee is $50.

The owner may refuse the warranty and, as long as the two parties haven’t signed the contract to build the home, the contractor can withdraw the offer to construct the residential structure.

When must the contractor offer the warranty?

The contractor must, in writing, offer the warranty either before or at the time the contractor and owner (or purchaser) sign a contract for the construction of the new home.

What must the contractor do to prove the contractor offered the warranty?

The contractor must include statements in the contract that: *The contractor made a written offer of warranty, and *That the owner or purchaser accepted or rejected the offer.

Does this law apply to all contractors who build new homes, or only to those contractors endorsed as residential contractors on or after July 1, 2008?

The law applies to all contractors that enter into written contracts to build new homes on or after July 1, 2008, regardless of the type of license that they hold.

The maintenance schedule must include the following minimum information, as per House Bill 2654.

1. Definitions of moisture intrusion and water damage.

2. An explanation of how moisture damage and intrusion can occur.

3. A description and recommended schedule for maintenance to prevent moisture intrusion.

4. Advice on how to recognize water damage.

5. Appropriate steps to take when water damage is discovered.

The construction contractors board shall make the information developed under this section available without charge to contractors who construct new residential structures or zero lot line dwellings.

Good job CCB!

This legislation is overdue in the construction business. Now we need a state required home sales addendum to the earnest money agreement that gives the same drainage information and maintenance schedule to new purchasers of existing dwellings.

The person selling the home should be required to provide the disclosure information on drainage to the new purchasers, on or before the date of the sale agreement being completed, just like the asbestos disclosures required currently for homes built prior to the mid 80’s.

I have been advocating this type of state required real estate legislation for years with respect to home drainage systems and their necessity.

This is a baby step forward, as the home groundwater drainage maintenance schedule advises those new home buyers what causes groundwater problems and various methods used to solve home drainage problems.

We need further legislation that mandates the disclosure of a maintenance schedule for home groundwater drainage issues on existing homes that are sold to all buyers as well.

The new law that is now in effect covers only new construction, which pertains to few homes, and few buyers, and then phases away when the home is sold after that first sale. The amount of home groundwater drainage fraud and ignorance perpetrated by homeowners that do not disclose or discuss the issue of home groundwater drainage problems as they pertain to their home, is large.

Lenders are sitting on hundreds of homes in their REO departments that have massive groundwater drainage problems.

Many homeowners sell these homes to uneducated first time buyers that have never heard of home groundwater drainage problems, or know nothing about home drainage problems and how they can impact the value, and health of the home.

Many of these first time buyers, or more seasoned buyers for that matter, are stuck with home groundwater drainage problems that they are not familiar with. As a result, many of those home buyers begin a long process of self education with respect to the issue of home groundwater drainage. This can culminate in years of failed home groundwater drainage attempts and the homeowner being bilked by numerous contractors who profess the ability to solve the home groundwater drainage problem, but do not solve the problem. This causes homeowners lots of grief and monetary loss.

Why just mandate the maintenance information on home groundwater damage to new home buyers when the vast majority of homes with problems are older existing homes? As a practical matter, the percentage of new home sales is very small compared to the volume of existing older homes sold yearly.

I simply cannot imagine how the subject of disclosure and public information of home groundwater problems escaped the conscience, and the legislative process of the Oregon State legislature when the current 2007 legislation on this subject was drafted and passed into law. What possible reason could sustain an opposition to the inclusion of existing homes to the act that now covers new homes?

A bill that makes the inclusion of an addendum to the earnest money agreement is needed to solve this problem. Where were the Oregon real estate board members when this legislation was swept into law?

After 25 years as a former member of the National Association of Realtors and an Oregon Licensed Real Estate Broker selling homes, land to developers, and commercial-investment real estate, and currently a licensed, bonded and insured contractor in Oregon for 13 years, I am quite familiar with the methods used to protect the public from harm with respect to real estate legislation.

Most often our Oregon real estate board members are present and powerful, while legislating on behalf of the home owners of Oregon. It is amazing to me that the Oregon real estate board members and the Oregon state legislature could see the validity of the issue concerning home groundwater drainage disclosure and maintenance information given to new home buyers in its proper context, and yet throw the “baby out with the bath water” on this issue.

Those of you in the state legislature that profess to have governing skills should draft legislation that would mandate the inclusion of existing residences to the law that now mandates the builder/contractor of a new home provide the first buyer of a residence with a maintenance schedule for home groundwater problems, and provide the buyers with information on methods used to solve home groundwater drainage problems.

Why does the information disclosure only pertain to the first purchaser of the home and no other future home buyers? Who lobbied for this provision excluding the public in general from this information?

With respect to this issue, I am not convinced that state government gives a care about the public in general. The law seems to have been passed, and watered down, with the opposition of the new home builders lobby, who probably did not want the law to begin with. Home builders have been historically ignorant and cheap about the inclusion of home drainage systems into the budget of their homes.

The tendency is to install a perforated pipe with a sock on it, laid flat on the foundation footing of the home, connecting the downspouts to the storm sewer, and calling it good, with respect to mandated home drainage, seems to still be the extent to which planning departments deal with home drainage problems.

See articles on this subject in this blog. It is to this extent only that planning departments mandate home groundwater removal systems other than plumbing downspouts.

The planning departments of cities and counties, and the builders of new homes seem uneducated on the subject of hand excavated french drains, or they choose to ignore the evidence before them.

So it is, behind the scenes of public view< with respect to home groundwater drainage issues.

This new legislation, while appreciated in part, seems to me just another half hearted political attempt to satisfy everyone but the public.

The business of legislation on the state and federal level should be conducted by people of public conscience and science only, not lawyers with education and experience empowered by political and functional manipulation for the greater good of government and corporate interests.

When legislation for the public good, as it pertains to laws protecting the interests of citizens, as compared to the interests of government or corporate interests, is confronted by groups of organized and financed opponents, the history of this confrontation is that the less financed and organized public, individual citizens, will lose.

Following the loss, it is possible to re-group and organize to win in the end, only to face further challenges by the financed opponents to overturn the effort. Such is the price of liberty.

Write the governor and your Oregon state representatives. Encourage the passage of a law to mandate information and maintenance schedules on home groundwater drainage for all existing homes in Oregon.