What Does a Builder’s Warranty Cover? The 1-2-10 Rule

A builder’s warranty on a new home typically covers three things on three different clocks: workmanship and materials for one year, mechanical systems like plumbing and electrical for two years, and major structural defects for up to ten years. The industry calls this the 1-2-10 model, and the coverage is almost always included in the purchase price. What does a builder’s warranty cover in practice? Finish work and construction quality in the first year, the systems that run the house in the second, and the load-bearing bones of the home for the rest of the decade — with a long list of exclusions and some maintenance strings attached.

The clock starts at closing. Once a tier expires, the builder is no longer responsible for that category of problems, so knowing which bucket a defect falls into is often the difference between a free repair and an out-of-pocket bill.

Year One: Workmanship and Materials

The first twelve months cover the broadest category and the one most new homeowners interact with. It focuses on how well the home was built and whether the materials meet quality standards. Covered items include paint, drywall, interior trim, cabinets, countertops, doors, windows, exterior siding, stucco, flooring, carpet, ceramic tile, fireplace construction, and roof coverings.¹

Expect nail pops in drywall, hairline cracks, paint flaws, and small fit-and-finish issues as the house settles through its first seasonal cycle.² Many builders schedule cosmetic repairs near the end of the first year so they can address everything at once.

Not every imperfection qualifies for a repair. Warranty programs apply tolerance thresholds. Under the Alberta New Home Warranty Program, for example, nail pops are generally not treated as defects unless they break through the drywall or appear in large clusters, and drywall cracks are reportable only if they exceed 12 inches in length or 3/32 of an inch in width.³ Cracks that keep widening, or that come with movement in floors, doors, or windows, are worth reporting regardless.²

Year Two: Mechanical and Distribution Systems

The second tier covers the home’s working systems for a full two years from closing: HVAC, plumbing supply and waste piping, electrical wiring, and ductwork.⁴ Slow drains, circuit failures, and HVAC performance problems need to be reported before the 24-month deadline. After that, the builder is no longer obligated to fix system-related issues, and HVAC replacement alone can run $4,000 to $8,000.⁵

Years Three Through Ten: Structural Defects

The ten-year tier is the longest but also the narrowest. It applies only to load-bearing components that have suffered actual physical damage making the home unsafe or unlivable. Covered elements include roof framing, load-bearing walls and partitions, beams, girders, lintels, columns, footings, foundation systems, floor framing, and masonry arches.⁶

A collapsing roof or a failing foundation qualifies. A hairline crack in drywall or normal settlement does not. The stakes are high when a structural claim is valid: industry estimates put the average structural claim at roughly $70,000, and catastrophic foundation or load-bearing failures routinely exceed six figures.⁷ These problems typically surface in the second half of the warranty period, between years four and eight.⁸

What a Builder’s Warranty Does Not Cover

Knowing the exclusions is just as important as knowing the inclusions. Common items that fall outside coverage include:

Household appliances like dishwashers, ovens, and refrigerators, which are covered by the manufacturer’s warranty instead.⁴
Normal wear and tear: scuffed floors, faded paint, worn carpet, minor scratches.⁹
Damage caused by homeowner neglect or improper maintenance.¹⁰
Weather and natural disasters: storms, flooding, hurricanes. Those claims go to homeowner’s insurance.¹⁰
Unauthorized modifications and DIY projects, or work by outside contractors that alters original construction.⁹
Landscaping — grass, plants, trees — unless the warranty specifically says otherwise.¹⁰
Small cosmetic cracks in brick, tile, cement, or drywall within normal settlement tolerances.⁴
Incidental costs during repairs, like temporary housing or storage.¹¹

Maintenance That Keeps Coverage Valid

A builder’s warranty is not an unconditional guarantee. Builders routinely deny claims when the damage traces back to neglected upkeep, and the warranty document usually spells out what the homeowner has to do. Failing to do it can void coverage for anything caused by the lapse.

Tasks typically assigned to the homeowner include cleaning or replacing HVAC filters on schedule, inspecting and clearing gutters, sealing grout, maintaining proper drainage and grading around the foundation, and servicing appliances per the manufacturer’s instructions.¹⁰ Clearing drains is also considered routine homeowner maintenance rather than a warranty repair.¹² Keep records. If a claim is ever disputed, dated receipts and service logs can decide it.

Water Intrusion: Where It Falls

Leaks are tricky because the same symptom can land in different tiers depending on the cause. A leak traced to poor window or door installation may be treated as a systems-level issue and covered for two years. A roofing defect from poor construction that compromises structural integrity could qualify under the ten-year structural tier.¹² In California, inadequate drainage that causes water intrusion, or improper waterproofing, may be treated as a latent construction defect with claims possible for up to ten years under the state’s statute of repose.¹¹ Roof wear and tear, however, is excluded across every tier.

The 11-Month Inspection

One of the most valuable things a new homeowner can do is schedule an independent inspection around the 10th or 11th month after closing, before the one-year workmanship and materials tier expires. By then the home has been through at least one full seasonal cycle, which exposes issues that weren’t visible at closing.

A qualified inspector checks structural elements like the foundation for cracks wider than a quarter inch and uneven floors, systems including HVAC performance, plumbing pressure and leaks, and electrical panel condition, exterior features such as roofing, flashing, grading, drainage, and window caulking, and interior items like drywall nail pops, cracked grout, and cabinet alignment.¹³ Moisture meters and infrared cameras often turn up hidden problems. The written report, with photos and specific locations, becomes the documentation sent to the builder.

These inspections typically cost between $500 and $1,000 and can head off repair bills ranging from $1,000 to more than $15,000 for problems like foundation cracks or water intrusion. Industry data suggests independent inspectors resolve roughly 90% of warranty issues, compared with about 40% when homeowners rely on builder-led walkthroughs.¹³

How to File a Claim

Read the specific warranty document first to confirm coverage, exclusions, deadlines, and the required method of communication. Submit claims in writing with a clear description, photographs, and supporting evidence. Verbal complaints to a sales representative are generally not enforceable.⁵

Watch for short claim windows. Many builders require homeowners to report a defect within 30, 60, or 90 days of discovery, even when the broader tier is still active. Missing that window can be enough to kill the claim.⁵ Keep a running log of correspondence, repair orders, and follow-up visits. If a claim is denied, ask for the reason in writing and then follow the dispute path in the contract, which often involves mediation or binding arbitration. Most new-home contracts require arbitration rather than a jury trial, so the forum is usually set before any dispute arises. For significant defects, consulting a construction attorney is worth the cost.

If You Sell: Transferring the Warranty

Most builder warranties transfer to a subsequent buyer if the home is sold during the coverage period. Under 2-10 HBW policies, the warranty transfers automatically; the new owner may complete a transfer form or provide a settlement statement to register the warranty in their name, but that is not strictly required before filing a claim.¹⁴ QBW warranties also transfer automatically.¹⁵

Some states codify this. In New Jersey, builder warranties are attached to the property and should transfer upon sale; the homeowner contacts the warranty administrator to make sure the paperwork is in order.¹⁶ Florida’s HB 623, effective July 1, 2025, requires builders to provide a one-year warranty that automatically transfers to any buyer within that period. If the builder offers a warranty longer than one year, the documents must say in plain terms whether the extra coverage also transfers.¹⁷

Builder’s Warranty vs. Home Warranty Service Plan

These two products are frequently confused. A builder’s warranty comes with the newly constructed home, is included in the purchase price, and covers construction quality: workmanship, materials, mechanical systems, and structural integrity. A home warranty service plan is a separate paid contract, usually renewed annually, that covers the repair or replacement of existing appliances and systems when they fail from normal use.⁴

The overlap is minimal. A builder’s warranty does not cover appliances. A home warranty service plan does not cover structural defects or construction quality. Some new homeowners add a service plan specifically to cover the appliance gap, though that means monthly or annual premiums plus per-call service fees typically ranging from $75 to $125.¹⁸

Protections Beyond the Written Warranty

Most states recognize an implied warranty of habitability for new construction. It exists automatically, whether or not the builder puts it in the contract, and it guarantees that the home was built in a workmanlike manner and is suitable for use as a residence. It covers latent defects — hidden problems not reasonably discoverable at purchase — such as structural failures, defective plumbing or electrical systems, and safety-related code violations.⁶ Illinois courts have extended this protection to subsequent purchasers, meaning a second or third owner can sue for latent defects even without a direct contract with the builder.¹¹

Whether a builder can disclaim the implied warranty depends on where you live. In Zambrano v. M & RC II, LLC (2022), the Arizona Supreme Court ruled that builders cannot disclaim the implied warranty of workmanship and habitability, even if the buyer signs a waiver, citing the unequal bargaining power between builders and buyers. Alabama, North Carolina, South Carolina, and Washington still permit builders to offer express warranties in exchange for waiving the implied one.¹¹

Separately, every state sets a statute of repose, an absolute cutoff after which no construction defect claim can be brought regardless of when the defect is found. The deadlines vary dramatically: four years in Tennessee, ten in Illinois, Hawaii, Alaska, and New Jersey, twelve in Pennsylvania, fifteen in Iowa for residential property, and up to twenty in Maryland. New York and Vermont have no statute of repose for construction claims at all. Several states grant a discovery extension of one to four extra years when a defect surfaces near the end of the repose period.¹⁹ In California, the ten-year period is firm; equitable tolling does not extend it, and builder repairs do not reset it.¹¹

California’s SB 800, the Right to Repair Act, also sets a mandatory pre-litigation process: builders must receive written notice of defects and a chance to inspect and repair before a lawsuit can proceed.²⁰ Texas’s Residential Construction Liability Act requires 60 days’ written notice from the homeowner and gives the builder 35 days to inspect before suit.¹¹ Check the specific statute in your state before relying on general timelines.

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