Ace’s Home Warranty

Ace’s Home Warranty May 2008 Legal Presentation

Historical Background • ACE’s Builder’s Warranty established in 1994 when Home Owners Warranty Company (HOW), the nation's largest new home warranty company, went bankrupt • Greater Houston Builders Association created ACE’s Builders' Warranty to: • provide Performance Standards • Define builder's warranty obligations to the home buyer, • Establish dispute resolution system • Inform home buyer's of their rights under Texas law

What is the ACE’s Home Warranty? • Express Written Warranty • ACE’s role is administrator • Warranty provided by Builder – not ACE’s • Different from the home protection plans that are often purchased on resales • ACE’s is not responsible for compliance with the warranty by the Builder • ACE’s primary duty is to help resolve disputes between homeowner and builder

What does ACE’s warranty cover? • Year 1 only: • Site work, concrete, slab, masonry, framing, interior finishes & trim, insulation, roof, siding, windows, doors, sealant, gutters, tile, stone, floors, stucco, fences • Years 1 & 2 only: • Plumbing, HVAC, Electrical • Years 1-10: • Major structural failures

Dispute Resolution –ACE’s “Administrative Intervention” • Builder and Owner agree to attend “administrative intervention” meeting and “make every reasonable effort” to resolve dispute • Builder and Owner must submit description of the alleged defects and proposed resolution at least 5 days prior to meeting • ACE’s representative facilitates “administrative intervention” meeting

Next Step: TRCC Inspection and Dispute Resolution Process • Owner and Builder agree that if “administrative intervention” is not successful, they will commence TRCC process • Owner gives Builder the notice required to start the TRCC inspection and dispute resolution process • TRCC inspects and reports • Parties attempt to resolve dispute

Next Step: Mediation • ACE’s facilitates mediation • Mediator chosen from ACE’s list • Costs of mediation shared by the parties Next Step: Binding Arbitration • Dispute submitted to binding arbitration in @ with Construction Industry Arbitration Rules of AAA • Arbitration hearing occurs in the home Waiver of Right to File Lawsuit

Ace’s v. TRCC warranties • TRCC statutory warranty is paramount - Builder agrees to abide by TRCC standards as well as Ace’s • Ace’s warranty does not waive or lessen the Builder’s obligations under TRCC • In certain areas, Ace’s warranty covers more than TRCC warranties • Ace’s warranty is transferable with no transfer fee

Requirements for Builder to join ACE’s: • Builder agrees to build in accordance with applicable code • Builder agrees to a minimum of three independent inspections throughout the building process • Builder is encouraged to maintain comprehensive general liability insurance • Builder agrees to abide by a written Code of Ethics • Builder agrees to participate in the ACES Dispute Resolution System

Cost of ACE’s Warranty • If Builder has general liability insurance: • $250 to join • $125 per house • $125 yearly renewal • If Builder does not have general liability insurance: • $275 to join • $150 per house • $125 yearly renewal ACE’S WARRANTY CAN ONLY BE PURCHASED BY BUILDER

Ace’s Home Warranty