Homebuyers Need the Construction Details for Their Home
Our homebuyers often tell us that few of our competitors, stick or modular, provide thorough and detailed construction information. The reason homebuyers like our emphasis on construction details is that they are almost always novices. They recognize that they lack professional knowledge, and they’ve heard the stories about cost overruns from their friends. They’re afraid they’re going to make a mistake or be taken advantage of. They are comforted by our efforts to patiently explain the construction details and then to document them in writing.
However, sometimes we don’t explain the construction details as well as we could because we forget how much more we know as professionals than our homebuyers. Our homebuyers sometimes unintentionally contribute to this miscommunication by saying they understand something they’re embarrassed to admit they don’t understand.
For example, a construction professional knows the significance of this note on a homebuyer’s elevation drawing:
“The ground level elevations are approximate, and the final heights will be determined during the site work”.
The professional realizes that any of the following might be affected by the site work on their homebuyer’s property:
- How much of the foundation will be exposed above the finished grade
- Whether kneewalls will be required or a walkout will be possible
- How many steps will be needed from the ground to their entry doors, porches, and decks
- Whether railings will be needed on the steps to their entry doors, porches, and decks
- How many steps will be needed from their house into the garage
Moreover, the professional knows that each of these changes will alter how their homebuyer’s finished home will look and function. Because homebuyers are unlikely to recognize these implications, the professional needs to explain them in some detail. Of course, this level of construction detail overwhelms some homebuyers. And few homebuyers absorb all the construction details. But even though the professional can’t make every homebuyer understand or recall every word they say, they should err on the side of too much information rather than on too little.
Presenting the Construction Details to a Novice Is Not Over Explaining
Sometimes construction professionals are concerned they are guilty of “over explaining”. They would be over explaining if they were talking to an expert rather than a novice. An expert has mastered the material, so they can be presented new information in their area of expertise in a few simple, brief statements. But a novice is trying to learn unfamiliar material they don’t yet understand. When explaining this new material to them, the professional needs to elaborate the details until the novice understands how the parts fit together.
For example, if a construction supervisor tells an apprentice carpenter on his first day to “frame the house”, the apprentice might not know where to begin. But once the apprentice has framed many houses, the supervisor can say this and the carpenter will know all the steps. When we say, “Always keep your explanation short”, we confuse the two stages of learning. What works for the expert isn’t enough for the novice.
Finally, providing the construction details to homebuyers does not necessarily mean being long winded. Completeness and brevity can go together. But if a construction professional is going to make a mistake, they should err on the side of completeness. You as the homebuyer deserve this.
For more information about getting all of the details from your modular dealer and general contractor, see Selecting a Modular Home Dealer, Modular Home Specifications and Features, Selecting a General Contractor, and see The General Contractor’s Responsibilities for Building a Modular Home in my book The Modular Home.
Modular Home Insurance
When building a modular home you need insurance coverage for five parts of the project:
- The delivery of the modules
- The set of the modules on your foundation
- The work done to your land before and after the modular delivery (tree clearing, excavation, foundation, etc.)
- The work done to complete the “button-up” of your modules after the set
- The completed home after you receive a certificate of occupancy from the building department
Most of this coverage should come from the companies that are completing each step. The delivery and set of the modules, including the crane, should be insured by the modular manufacturer and/or modular dealer. To ensure your modular home insurance is in place, you need to ask each modular dealer you are considering to have their insurance company mail you an insurance binder. It is best to receive it directly from the insurance company, since it is fairly easy to fake the forms. Make sure the coverage includes sufficient liability insurance and workers’ compensation; ask your insurance agent for the recommended amounts. This will limit your potential liability if the dealer or one of his subcontractors is not fully insured and something goes wrong during the set, such as an accident causing a serious personal injury or significant property damage to your home.
You need to follow the same procedure with your general contractor (GC) and any subcontractors you directly hire to complete the work to your property and the button-up of the modules. Secure a certificate of insurance from each of your contractor candidates before making your final selection. Ask your own agent to review the coverage.
You should also insist that your contracts with your modular dealer and contractors state what modular home insurance coverage each of you is obligated to provide. You should accept responsibility for obtaining a builder’s risk policy or its equivalent. The contractors should accept responsibility for providing general liability insurance and, if they have employees, workers’ compensation.
Modular Home Insurance with a Builder’s Risk Policy
The advantage of a builder’s risk policy over a typical homeowner’s policy for your own modular home insurance is that it automatically provides coverage for theft of building materials and supplies as well as vandalism. You should direct your insurance agent to provide this additional coverage even if you opt for a homeowner’s policy. Since your personal circumstances may differ and your agent may offer other alternatives, consult with your agent.
Modular Home Insurance and Lender Financing
If you are paying for the modules with funds from a lender, which means you are paying by the assignment-of-funds method, your lender will require you to have your modular home insurance in place when you close on the loan. If you are financing your home with your own funds, have coverage in place before your GC begins any work.
If your lender is paying for the modules after the set, the dealer’s insurance should be responsible while the modules are parked on your property before the set, since you will not yet own them. If the dealer does not provide coverage, you should direct your insurance agent to provide it. If you are using private funds to pay for the modules upon delivery, your insurance should provide coverage when the modules are parked on your property, since you will already own the units. You should verify this. Your insurance is less likely to provide coverage when the modules are stored away from your property in a staging area. If you cannot obtain coverage for your situation, ask the dealer for help.
Instruct your insurance company to mail or fax your modular dealer a certificate of your modular home insurance a few weeks before the scheduled delivery. This proves that you have the necessary coverage. The effective date should be set at least 48 hours before the scheduled delivery date and remain in place for at least a week. The certificate should state, “[Dealer’s company name] is loss payee as interest may arise.” The certificate protects the dealer and manufacturer should your modules suffer damage after they are set on the foundation but before your lender pays the dealer. This might happen, for example, if lightning were to strike the modules the first night of a two-day set. Should this unlikely event occur, the certificate ensures that your insurance company would compensate the dealer so he can pay the manufacturer. Once the dealer is paid for the house, he no longer has any insurable interest, so your insurance coverage reverts to you and your lender. The manufacturer’s insurance should cover the modules while they are being delivered to the site. The dealer’s and crane company’s insurance should cover the modules while they are being lifted onto the foundation.
Modular Home Insurance for Personal Property During Under Construction
Do not move any of your belongings into your home before your GC finishes his work without his permission. If the GC agrees, he will ask you to use those rooms he has finished. If you intend to store your things in the basement, he must have already completed all of his work there. Since you are responsible for theft or damage, ask your insurance agent about your coverage.
Modular Home Insurance Costs Less
Modular home insurance during construction will save money compared to insuring a site-built home due to the shorter construction time. The shorter construction period also lessens your exposure to the typical risks that attend construction sites, such as vandalism and the pilferage of construction materials. Vandalism is further curtailed because the modules can be secured more rapidly than a site-built home. The ability to quickly secure the modules also makes it more difficult for someone to steal construction materials. Pilferage is further reduced because of the size of the modules; you cannot walk off with a module in the way you can carry away a few boards of lumber. Completing the home more quickly also reduces your biggest financial risk, that of a personal injury to a contractor working on the job or a neighborhood child playing around the home after hours.
For more information about modular home insurance during its construction, see Selecting a Modular Home Dealer, Selecting a General Contractor, and Financing a Modular Home in my book The Modular Home.
Homeowners have a few warranty service obligations of their own that must be taken seriously, especially those relating to normal maintenance and care. A good overview of the homeowner’s responsibilities can be found in a booklet by the National Association of Home Builders titled, “Home Maintenance Made Easy.”
Homeowner Warranty Service Obligations – Notify Responsible Party
One responsibility often ignored by homeowners is the obligation to contact the appropriate party in a timely fashion when a warranty service situation is discovered. Even a simple warranty issue can become serious and require an expensive fix when you delay reporting it. For example, if your front door leaks a little water every time it rains because the threshold needs to be adjusted, the finished flooring and framing can quickly become damaged.
Homeowner Warranty Service Obligations – Maintenance and Care
Modular homes are strong, but they are not indestructible. Expect your home to show signs of normal wear and tear over time, and accept responsibility for fixing the inevitable results.
You will want to restore your home to as-new-as-possible condition after the first heating season, since most of the settling and drying of wood will have occurred by that point. In a typical home, completing this tune-up usually takes a day or two by someone who has carpentry, drywall, and painting skills. Some of these normal changes will reappear in subsequent years, but they should be less noticeable and easier to repair.
If your modular dealer was also your GC, it is reasonable to expect him to correct these problems before your warranty expires. It is less clear, however, who should make these corrections when the dealer and GC are separate companies. Some of the drywall and moldings will have been installed by the manufacturer, and some by the GC. You could insist that each correct what they built, but this assumes that all changes in a particular area of your home are due to the company that completed the work in the area, which is not always the case. If your home has excessive drywall cracks in a few different areas, for example, they could have been caused by the way the manufacturer built your home or by the way the GC leveled the sill plate. If there is a lot of shrinkage of the wood moldings and floors installed by the manufacturer, it could have been due to the materials used by the manufacturer or to excess moisture that entered the home during the button-up. The best course in this situation is to contract with your GC to complete all of the tune-up, regardless of who built the different parts of your home.
Your GC may balk at taking on this responsibility. Since he did not build the modules, he might fear that he is exposing himself to too big a risk. In addition, if he has no prior modular experience, he may feel unable to predict the amount of time required for the tune-up. A fair way to handle this is to agree to pay him for his actual time and materials. An alternative would be to take on the work yourself, if you have the skills.
When completing the tune-up, the GC should retape any cracks in the drywall or the tape covering the drywall. He might be tempted to cover them with compound or caulk to save time and money, but the cracks will reappear if he does. On the other hand, fine cracks in the mud covering the drywall tape can be filled with a high-quality, paintable caulk. Small, open miter joints or other small gaps between pieces of wood can be filled with wood filler or caulk; larger gaps should be corrected by removing and reinstalling the wood. Popped drywall fasteners should be driven further into the framing, when possible. Otherwise, additional fasteners should be used. A small gap between a wall and a kitchen or bath countertop should be filled with caulk.
After these corrections are completed, the reworked areas can be touched-up, ideally with paint or stain left over from the original button-up. If the GC has to buy new paint or stain, he may not be able to obtain an exact color match with the previous application.
Although you do not need to, you might want to wait until your home has finished settling and drying out before painting the walls and ceilings with custom colors. If you do not wait, you should save some matching paint to complete the tune-up. However, you may still need to paint an entire wall or ceiling in a room when you do the tune-up to avoid shadows caused by slight variations in color.
You might also want to wait until your home has finished settling and drying out before wallpapering or stenciling. Regardless of when you apply it, you will be responsible for repairing any damage to the wallpaper due to settling or drying.
For more information about modular home warranty service, see Warranty Service for a Modular Home in my book The Modular Home.
In my last blog I discussed warranty service expectations, inspections, and procedures. In this blog I will discuss what happens if you disagree with your dealer or GC about whether something in your home is defective, damaged, or poorly installed.
Building Codes and Warranty Service
When a warranty service problem involves a building-code violation, the burden will usually be on the manufacturer, dealer, or GC to correct the problem. Installing the wrong type of smoke detector is something the dealer, through his manufacturer, must correct. Using undersized framing for your site-built garage or deck is the kind of mistake the GC must correct. The dealer is not, however, automatically responsible for meeting specifications that exceed the state building code. For example, if your local building inspector insists that an air-infiltration barrier must be installed under your siding, but this is not the required by the state building code, your dealer would be accountable only if he had accepted responsibility for verifying whether any special codes were being enforced in your community. If you agreed to assume this responsibility but failed to obtain the correct information, than you would be responsible for the additional material and labor, including, in this case, the cost for removing and reinstalling whatever siding was already installed by the manufacturer.
Contractor Scope of Work and Warranty Service
The GC is not responsible when the scope of work for a task was not included in his original contract with you. For example, the fact that you need a set of stairs from the door to the backyard does not obligate the GC to provide them if you excluded them so you could build a deck in the future. Nor is the GC responsible for providing clean backfill to place around the foundation if the building inspector declares that the soil that was removed from the cellar hole cannot be used as backfill. If the GC uses the fill before the building inspector instructs him not to, the GC will be responsible for removing it, since he is obligated to know the building code. You will still be responsible, however, for paying for the replacement fill as well as for removing the rejected fill, if it needs to be taken from your site, since you needed this to be done regardless of the GC’s mistake.
Quality Guidelines for Warranty Service
Cosmetic issues are often sources of warranty service disagreements. A customer should receive the degree of finish they selected and paid for, but this is often different from what they may have seen in a model home. One way to handle disputes of this kind is to have your contract include a set of quality guidelines for materials and workmanship that can be used to help settle differences. Keep in mind, however, that guidelines and standards spell out the minimum acceptable workmanship and product performance. Your personal standards will likely exceed these standards in some areas.
Warranty Service and What Is “Good Enough”?
One perspective taken by guidelines for materials and workmanship is that it is neither realistic nor fair to expect a modular dealer or general contractor to remove blemishes that are not readily visible or noticeable, and can only be seen in unusual light or from very close range. Finished drywall, especially, will almost always show minor blemishes in the right light and from the right angle. For a customer to insist that such small items be addressed under warranty is to create a potentially antagonistic relationship. The customer wants their dealer and GC to take seriously those things that are most important to them. They do not want to create an atmosphere in which the dealer or GC feels compelled to deny assistance by appealing to some technicality in a set of guidelines that relieves them of responsibility. In other words, if the customer can exercise some flexibility over defining what’s “good enough,” they should expect the dealer and GC to adopt a similar attitude. You could ask your dealer to replace a pine bifold closet door with a small dent on the inside, which can only be seen when the closet is open. If you do so, however, do not be surprised if he tries to hide behind a technicality for some other item that’s important to you.
For more information about modular home warranty service, see Warranty Service for a Modular Home in my book The Modular Home.
Modular Home Warranty Service Expectations
When you buy a modular home, you expect it to arrive without mistakes, defects, or damaged materials. If you discover any, you expect the manufacturer to repair or replace them. You also expect the manufacturer to provide this warranty service at no cost to you. Manufacturers usually understand these expectations, but they have a few of their own. They will accept responsibility for problems found when your home arrives, but they expect your dealer, as well as you and your general contractor (GC), to accept responsibility for any damages incurred after that. This seems fair, and in principle it is. When you purchase your home from a dealer who completes the GC work, your warranty service expectations are likely to be met. When the dealer and GC are separate companies, however, the situation can trigger contention and distrust.
Modular Home Manufacturer’s Quality Inspections
A modular home is typically built with most of its interior complete. Walls, cabinets, tubs, doors, moldings, and electrical outlets are almost always installed at the factory. All of these products can be damaged accidentally, and this can happen as easily at the factory as at your site. Your home will be thoroughly inspected before it leaves the factory. The manufacturer will try to repair or replace any defective or damaged goods before shipping the home. When that is not possible without causing a delay, the manufacturer will document the problem, make plans to fix it at your site, and inform the dealer so that you are not surprised. Either way, the inspection enables the manufacturer to document any warranty problems with your home.The inspection, however, does not preclude disagreements between the manufacturer, dealer, and GC. If you discover any damage to your home after it is delivered and set, it could have been caused by the manufacturer even though it is not listed on the inspection report. But it could also have been caused by someone on your site.
The manufacturer could have missed an item, or an employee could have caused the damage and failed to report it. The same damage, however, could have been caused by one of the GC’s subcontractors, who may or may not have been aware of it. You or a friend could have unknowingly caused the damage.
Modular Home Warranty Service Procedures
Under the circumstances, it is not surprising that there are occasional disagreements over who is responsible for damages. The modular industry has developed a procedure for handling these warranty service situations. Modular manufacturers attempt to minimize these misunderstandings by requiring their dealers to identify and report in writing any warranty service issues right after the set. You can expect your dealer to insist that you complete a warranty service inspection, and sign the resulting written report. If the GC is separate from your dealer, ask him to sign the warranty service report along with you. You should receive a copy of the warranty service report that is also signed by the dealer.
The exact time allowed for the inspection varies from manufacturer to manufacturer, with some giving the dealer 24 hours after the set and others allowing him a few days for some items and a few weeks for others. Items that are easily damaged on site, such as installed vinyl floors and carpeting, are less likely to be covered beyond a few days unless there are extenuating circumstances. This warranty service procedure allows the manufacturer to limit its responsibility to preexisting conditions. Consequently, if you find a damaged item after the reporting period expires, the manufacturer will assume that the damage was caused by someone on your site, and will not accept responsibility for correcting it.
Since the set-day activities can cause accidental damage to a home, some manufacturers require the dealer to complete the warranty service inspection as soon as the modules are delivered. This is common with manufacturers who ask their dealers to select an independent set crew. Since the dealer selects the crew, the manufacturer wants the dealer to assume responsibility for any set-day damages. The manufacturer secures this accountability by having the dealer complete its warranty service inspection before the set. While this may seem reasonable, a delivery day inspection is unfair to the dealer and the customer. It is impractical to complete an accurate inspection on delivery day, given the poor lighting available in each plastic-wrapped module. It is also difficult to inspect a module when it is stuffed with ship-loose materials. Waiting until after the modules are set allows for a more accurate inspection. If at all possible, resist a delivery-day inspection.
In my next blog I will discuss disagreements about warranty service coverage.
For more information about modular home warranty service, see Warranty Service for a Modular Home in my book The Modular Home.
