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In North Carolina there is no state statute specifying the builder’s warranty obligations to the homeowner. Department of Housing and Urban Development (”HUD”) has required certain newly constructed housing to be protected by a ten-year insurance-backed warranty in order to be eligible for mortgage insurance from the Federal Housing Administration (”FHA”) for mortgages in excess of 90 percent of the appraised value of the property. Without such a warranty, the express warranty of the builder in the contract of sale will apply.
In addition to express warranties included in the agreement of the parties, North Carolina has recognized the implied warranty of workmanlike construction as a matter of law. This implied warranty applies to every contract by a builder for the sale of new dwelling, and requires the builder to impliedly warrant to the initial purchaser that at the time of passing the deed or delivering possession to the initial purchaser (whichever occurs first), the dwelling, together with all its fixtures, is sufficiently free from major structural defects, and has been constructed in a workmanlike manner, so as to meet the standard of workmanlike quality according to prevailing standards in the local area. The implied warranty only applies to latent defects, i.e. not to visible defects or those which should have been visible and could have been found by reasonable inspection at the time of closing. If an owner takes delivery of the home without objection to obvious, visible defects, this implied warranty will not apply to a subsequent claim based on such deficiencies.
Claims under this implied warranty of workmanlike construction may be brought in court by an owner for a period of three years after discovery of the latent defect. However, the statute of repose will bar a suit on any defect not initiated within six years after the date of closing, unless the defect was caused by gross negligence. If the home is occupied by the first purchaser and if the defect could reasonably be classified as latent, a claim based on an implied warranty may be brought for up to 6 years after the substantial completion of the home.
A warranty is required by statute in NC for manufactured homes. The following statutes apply only to manufactured homes:
Manufactured home. — A structure, transportable in one or more
sections, which, in the traveling mode, is eight feet or more in width or
is 40 feet or more in length, or when erected on site, is 320 or more
square feet, and which is built on a permanent chassis and designed to be
used as a dwelling with or without a permanent foundation when connected
to the required utilities, and includes the plumbing, heating, air
conditioning and electrical systems contained therein.
§ 143-143.16. Warranties.
Each manufacturer, dealer and supplier of manufactured homes shall
warrant each new manufactured home sold in this State in accordance with
the warranty requirements prescribed by this section for a period of at
least 12 months, measured from the date of delivery of the manufactured
home to the buyer. The warranty requirements for each manufacturer,
dealer, supplier and set-up contractor of manufactured homes are as
(1) The manufacturer warrants that all structural elements, plumbing
systems, heating, cooling and fuel burning systems, electrical systems,
and any other components included by the manufacturer are manufactured
and installed free from substantial defects.
(2) The dealer warrants:
a. That any modifications or alterations made to the manufactured home
by the dealer or authorized by the dealer are free from substantial
defects. Alterations or modifications made by a dealer shall relieve the
manufacturer of warranty responsibility as to the item altered or
modified and any resulting damage.
b. That a setup performed by the dealer on the manufactured home is
performed in compliance with the Code.
c. That the setup and transportation of the manufactured home by the
dealer did not result in substantial defects.
(3) The supplier warrants that any warranties generally offered in the
ordinary sale of his product to consumers shall be extended to buyers of
manufactured homes. The manufacturer's warranty shall remain in effect
notwithstanding the existence of a supplier's warranty.
(4) The set-up contractor warrants that the manufactured home is set up
in compliance with the Code and that the setup did not result in any