When buying or selling a home in Palo Alto many people are advised by their agents to purchase a home protection plan. These plans are insurance policies against breakage of many systems and fixtures in the home. The executive summary is if something breaks during the term of the policy, (one year which can be renewed) you can call the insurance company and they will send an independent contractor out to fix or replace the broken item. The owner just pays a $50-$60 fee for the service, and all other expenses for that item are covered. Sound great right?
Well, there can be some problems. The most common one happens if the person who purchased the plan did not get the code upgrade. This is essential, and if you do not purchase it and your home (like almost all homes in Palo Alot is more than 15 years old) then the plan becomes almost useless. Building codes change all the time, so you must get a policy that pays for the the repair to include upgrading to current code or the contractor will not make the repair. For example, if your water heater breaks, and the installation of a new one requires a code upgrades like on a higher platform or with more ventilation, the contractor will not install a new water heater because they will not perform work that is not up to code. The owner would have to pay for the upgraded installation and the insurance company would pay the cost of the new water heater, which is only a small portion of the total charge. If you buy a code upgrade the entire replacement would be covered.
However, sometimes your new Palo Alto home will have problems when you first move in. This is not that common, but it happens. If something breaks when you first move into your Palo Alto home and you call the home warranty company, the contractor may say it is a pre existing condition and want you to pay. This just happened to one of my clients and I was able to solve the problem.
My client just bought a Palo Alto condo and right after moving in one of the shower heads stopped getting water from the spigot. There was a property inspection done by the seller which stated that all the plumbing fixtures were in working order. We did a final walk through and tested all the shower heads and they were all working. I purchased a home warranty plan from Fidelity which I have found to be the most responsive company. My client called the insurance company, they sent out a plumber who said this is pre-existing and she had to pay for it. I called my service rep at fidelity, Michelle Bolgna, and she had me send her the property inspection. The plumber was over ruled, and they paid for the repair.
Since most homes in Palo Alto right now are being sold with no contingencies after the seller has ordered and paid for the inspections getting a home protection plan is even more important than ever. The buyer does not have to prove they did their own inspection, just that there was an inspection. That way, if there is a needed repair shortly after moving into a new home in Palo Alto, as long as the repair is in the contract and the home inspection did not find it broken, you can get it covered.
If you have any questions about buying or selling a home in Palo Alto please feel free to contact me.