How Modular Construction Impacts Builder Warranties

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Modular building practices are starting to become more mainstream, in the U.S. at least. In case you are not familiar with what modular construction is let me put it in a nutshell.

Modular construction is the building of a structure, a home in this case, in a controlled environment, i.e., a factory. This can include the entire home, but may include panelized construction as well. The home is then shipped via truck to the jobsite and assembled with a crane. The builder’s tradespeople hook up the systems to complete the home. Outside of permitting and utilities, the build time is typically half that of a traditional stick-built home.

RELATED: Two Things to Consider Before Making Warranty Repairs

As with any construction, the quality of the end product really comes down to the builder and project manager. In modular construction, certainly, a large percentage of the construction is done in the factory, but the end result falls on the builder.

Warranty coverage for a modular home is not very different from a stick-built project. The same Residential Construction Performance Guidelines (RCPG) established by the National Association of Home Builders will typically apply. The same eight-year statute of repose applies, and the expectation of the first-year warranty still applies.

Due to the controlled environment of the build process, it has been seen that there are fewer warranty type items associated with a modular home. In a factory, there’s no precipitation, hot and cold cycles between day and night, or seasonal freeze-thaw cycles during construction that contribute to expansion and contraction of the structural framing components in the home. That means fewer nail pops and less cracked drywall, door movement and jamb interference.

As the largest national third-party warranty administrator, we have seen that the severity of the first-year warranty process is not as dependent on the quality of the home as it is on the perceptions and expectations of the buyer. Much like parenting, it is crucial to set expectations for your buyers from the beginning and maintain consistent delivery of those expectations. There is a lot of psychology and research that proves this out—enough for an entire book. In short, the use of modular construction practices may reduce the actual warranty claims, but how builders manage buyers and their expectations during their first year in the home will be unchanged. So either re-read your old college psych books or find a better system for managing your clients’ expectations.

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