New Home Construction Warranties

The following commentary pertains to new home construction warranties and is provided by Shannon S. Frank, Attorney with Kahn, Dees, Donovan & Kahn, LLP and Indiana Builders Association member.

There are two types of warranties in new home construction:  “implied warranties” and “express warranties.”  Under Indiana law, “implied warranties” automatically apply to newly constructed homes. The implied warranty of fitness and habitability and the implied warranty of workmanship are warranties determined by caselaw and are not based in statute.  “Express warranties” are separate warranties that are given by the builder to the consumer and are typically outlined in the builder’s construction agreement (or verbally made by the builder).

In 1987, the Indiana legislature enacted a statute to enable a builder to control this liability with some certainty, in exchange for the builder giving the express warranty as set forth in the Indiana New Home Construction Warranty Act (see Indiana Code §32-27-2-1 et. seq.) and following the requirements of the Act.  Thus, at the builder’s option, he may choose to disclaim the implied warranties described above and provide an insured express warranty to the consumer.  This disclaimer is accomplished by the builder providing the specific express warranties that are detailed in Section 8 and complying with the additional provisions of the Act.

The warranties set forth in Indiana Code §32-27-2 are not automatic and are not part of a new home construction warranty unless the builder expressly chooses to include it as a warranty in his construction agreement.

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