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Home Warranties    Home warranties

Homeowners can protect their investment in many ways.  In addition to homeowner’s insurance, the County by law, requires new home construction to have warranty on the workmanship.  Consumers buying resale may opt to protect their appliances, plumbing, or electrical system.  While called “home warranties” they are actually home service contracts.  On this page, we provide information on these two “warranties.”

Home Service Contracts

'Home warranties', the name of the product itself, is prone to cause confusion this is because what is purchased is not a 'warranty' in the traditional understanding of the word.  What consumers buy when they purchase this product is really a home service contract.  What home warranty companies actually provide is access to a limited number of home service professionals in your area, which have an ongoing agreement with the home warranty company.  These technicians are routed to your home when a service call is requested, at a reduced rate (usually $40 to $100 for each separate call), and provide some evaluation of the issue, and possibly repair or replacement.  You purchase access to this reduced rate through the advance premium you pay (usually an annual or semi-annual payment) for this service. 

As mentioned above these “home warranty” companies do not provide a traditional warranty or insurance product on your appliances.  If anything in your home breaks or has an issue, it is not replaced free of cost or immediately repaired.  Rather, what occurs is a cost/benefit analysis to determine the best course of action, which is generally evaluated from the home warranty company's viewpoint.  If it is determined that a repair is not possible, they may provide a cash payment.  In that instance, the contract will determine the allowance for a cash payout if a home appliance or other item cannot be fixed.  The consumer should be aware that the fine-print within the agreement will often include exclusions and limitations to this payout, the method by which it is analyzed and calculated, and will likely not be the full cost of a new product.  We encourage consumers to read the contract and the fine print fully to make sure you understand the service you are purchasing.

In Maryland, unlike in some other states, there is no requirement for these companies to register. The main law governing this industry is the ' Maryland Service Contracts and Consumer Products Guaranty Act ' (Md. Code Ann., Com. Law § 14-401 et. seq. (2010)).  That Act has certain requirements, such as a 20-day period to allow for cancellation at the beginning of a term, encourages an informal dispute process to exist within the companies, and gives the Maryland Attorney General the right to seek an injunction to prohibit a provider from committing further violations.  

Unfortunately, home repair and service companies may lack the experience, training or credentials needed to safely and accurately perform the repairs.  Consumers should ask if the service tech being sent to their home to perform inspections or repair their HVAC or appliances has the needed licensing and credentials.  If you are told that the technician is licensed, ask for the license number and verify that it matches the person who knocks on your door.

Consumer should perform thorough research into the companies before they choose a warranty company, and that the terms of individual home warranty plans should be clearly understood before entering into an agreement with these companies.  Alternatively, instead of paying for a home warranty contract, one could create a savings account for unforeseen expenses or have a home equity line of credit at the ready when issues arise.  For more on this topic, see " Should You Buy a Home Warranty? " and " Water & Sewer Line Warranties " by Consumers' Checkbook Magazine. 

New Home Construction Warranties

Montgomery County Code 31C requires that new home builders be licensed before contracting to build new homes. This licensing also means that the home purchaser is coveredma by the Maryland Home Builder's Registration Unit's Guaranty Fund . In addition, County law also requires the builder to provide certain warranties to the new home buyer.

Warranty Requirements

  • For one year, the new home is warranted to be free from any defect in materials or workmanship, subject to the performance standards, limitations and exclusions listed below.
  • For two years, the new home is warranted to be free from any defect in the electrical, plumbing, heating, cooling, ventilating, and mechanical systems, subject to the performance standards, limitations, and exclusions listed below.
  • For five years, the new home is warranted to be free from any major structural defect, subject to the performance standards, limitations, and exclusions listed below.

Bonds and Financial Security

The builder is required to disclose in writing, prior to entering into a new home sales or construction contract, whether there is any bond, insurance, or other financial security which guarantees the builders warranty performance, and provide proof of the bond, insurance, or other financial security on request. In addition, the builder has to make the disclosures required under state law as to whether the builder participates in a new home warranty security plan approved by the state.


The builder is required to include the following notice in the sales or construction contract.  View the builder warranty responsibilities and sample notice here: Sample Notice and Warranty Finally, Montgomery County law does not require this builder to furnish any bond, insurance, or other financial security to guarantee the builder's performance of its warranty obligations. If a builder has promised you any other bond, insurance, or security to guarantee the performance of its warranty obligations, that bond, insurance, or security must be listed in the contract.


If you need help with a new home builder warranty issue, contact OCP by calling 240.777.3636, sending an email to or file a  complaint with our office.