Home Warranty and the California Residential Purchase Agreement

It is important to write a home warranty into the contract correctly. It is your proof of intent as an agent, and that of your client’s, as to what is to be ordered and paid through the escrow. Even if the home warranty is not paid through the escrow, that fact should be clearly stated in the warranty section of the RPA. Any party can pay outside of the escrow if they desire to.

The RPA has the home warranty section on page two, section D-6. Please make sure you address the following information:

-Name of warranty company.
-Cost of warranty Be informed. It is always better to quote a little higher if you are not positive at the time you areaddressing the contract.
-Coverage. It is important to order complete coverage, as that is what the client’s expectation of coverage will be. In the example of American Home Shield, that would be the “COMBO” coverage. Each different warranty company has their own name for it.

“Code and Permit Upgrade” is a part of this Combo. It is important to know what is being referred to: When a covered item is being replaced by the warranty, the costs of necessary permits to do so will be covered (up to a specified limit) and a portion of necessary code upgrades required by law (up to a specified limit) will be covered. It does not mean that if a home simply has code violations that the warranty will correct them, or if something was repaired, installed, modified, etc. without the necessary permits or code compliance that the warranty provides coverage for that condition. Make sure to check to box for “Code and
Permit Upgrade”.

-Optional items Be aware of what the optional items are under the warranty, make sure you address those and allow for their additional cost. Typical optional items would be:
Pool, spa, well pump, septic, refrigerator, washer and dryer, water softener, just as a few. Air conditioning may or may not be an option under the warranty selected (it is included with American Home Shield), but make sure to check the box if the property has it (including evaporative coolers).
The “Other” section refers to optional coverage in addition to the A/C, Pool/Spa (where there are boxes to check), and those options should be itemized in writing.

Please be aware of what the property contains, and communicate clearly with your client what will and will not be covered. There are brochures to give to them, and a contract will also be mailed to them after payment is received. If they are not living at the property address, it is important to give us their mailing address so they receive their contract.

The warranty can be ordered via:
Phone: 1-800-735-4663
Online: www.ahs.com

If you ever need personal assistance, do not hesitate to contact:
Susan Renaut Britter
Voicemail: 1-800-800-8880 #6228
Cell: (559)281-6285