New Construction Warranty in Minnesota, what does 1-2-10 mean?

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New Construction Warranty in Minnesota is called a 1-2-10 Warranty.

Minnesota State Statutes require this warranty as a minimum level of protection for consumers.  Builders of a new home must provide a 1 year warranty on the entire home, 2 years warranty on systems and 10 years for the ‘major structural’.  The actual language from the Minnesota State Statutes on New Home Warranty outlines the three phases like this:

(a) during the one-year period from and after the warranty date the dwelling shall be free from defects caused by faulty workmanship and defective materials due to noncompliance with building standards;

(b) during the two-year period from and after the warranty date, the dwelling shall be free from defects caused by faulty installation of plumbing, electrical, heating, and cooling systems due to noncompliance with building standards; and

(c) during the ten-year period from and after the warranty date, the dwelling shall be free from major construction defects due to noncompliance with building standards.

New Construction Homes in Farmington and Lakeville Minnesota

Building a New Home can be very Exciting!

There are several additional items in the Statute, you can read the entire article on the Minnesota Office of the Revisor

Warranties ‘survive the passing of title’, this is specifically stated and means the warranty stays in effect for the home even if the property is sold and title is transferred to a new owner.

Builders have a ‘right to inspect’ the defects after a buyer has informed them in writing about the problem. Home Re-modelers are also subject to warranty responsibilities.

One question I am often asked is, “What happens to the Warranty on my New Home if the Builder goes bankrupt or out of business?”.  There is a fund called The Contractors Recovery Fund, established to provide compensation to homeowners with a claim against a licensed builder who is no longer in business and has no assets.  There are limits on these funds and the homeowners recovery may be reduced or prorated if multiple claims  are made on the fund.

If you are considering building a new home, I can send you a copy of the Minnesota Statutes or I’be happy to discuss them with you.  Give me a call at 612-889-6496 or email me with questions.

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About Author

Sheryl Petrashek is a Realtor with Re/max Results. She is based in Apple Valley and Sells Real Estate in Apple Valley, Burnsville, Eagan, Lakeville, Rosemount and Farmington MN.

4 Comments

  1. That is actually pretty interesting. I never realized that new home construction comes with such a warranty.

    How limited is the fund? I mean if a whole neighborhood was built structurally unsound, would owners be able to recovery their losses and get their homes fixed, or does it usually fund a certain percentage?

    • Sheryl Petrashek on

      Many buyers are specifically interested in New Home Construction because they value the warranty. The fund is limited, it’s my understanding there is a $75,000 limit for recovery on work performed after Dec 01, 2007 and a $50,000 limit for work performed before Dec 1st, 2007. The recovery from the fund is limited and is distributed pro rata amongst all claimants. I’ve been told the Contractor Recovery Fund is funded by fees charged to contractors to obtain and hold a license, but I am not sure if that is still accurate. Thanks

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