Under the TREC New Home Contract (Completed Construction), the builder typically provides a warranty. What does this warranty generally cover?
Correct Answer
B) Defects in materials and workmanship, and structural components, for specified periods
Builder warranties typically cover defects in materials and workmanship for a specified period (often 1-2 years) and structural components for a longer period (often 10 years). The specific terms vary by builder and warranty provider.
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A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
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