HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 623 Home Warranty Transfers
SPONSOR(S): Commerce Committee, Insurance & Banking Subcommittee, Steele
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 18 Y, 0 N, As CS Herrera Lloyd
2) Commerce Committee 20 Y, 0 N, As CS Herrera Hamon
SUMMARY ANALYSIS
A warranty agreement is a contract that may be given by a builder or purchased by a builder from a home
warranty association. In Florida, home warranty associations are regulated by the Office of Insurance
Regulations (OIR) and must maintain certain minimum financial standards to do business. The home warranty
agreement often covers home systems and common appliances, whereas a builder warranty covers structural
components of a home. A home warranty agreement is tied to the owner selling the home and does not
transfer to the person buying the home unless the home seller transfers it to the new owner.
The bill makes warranties covering structural components of a home automatically transfer with the property
when it is sold, rather than transferring it only if a separate assignment is made within 15 days of the sale of
the residence.
The bill also:
Defines structural components to include things such as the roof, plumbing system, electrical system,
foundation, basement, exterior/interior walls, ceilings, floors, stucco, or spray foam.
Applies the automatic transfer requirement to all express written warranties issued by the home
builder or purchased by the builder from a home warranty association.
Provides that the transfer of a warranty does not modify or extend the warranty’s commencement date
or its duration, nor is the scope of coverage expanded due to the transfer.
Specifies that the builder is not transacting insurance when providing a compliant warranty to a home
buyer.
Prohibits the provision of indemnification against consequential damages resulting from the failure of
any structural component except through insurance.
Also, the bill establishes that it is an unfair method of competition and an unfair or deceptive acts or practice for
a builder to fail to continue to perform obligations under a transferred home warranty agreement.
This bill provides an effective date as of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0623c.COM
DATE: 1/24/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
A warranty is an assurance that a manufacturer or seller makes about the condition of its product. 1 A
warranty means that a manufacturer or seller will replace or repair the product under certain instances.
A warranty can be either express or implied.2
An express warranty is a verbal or written assurance for the product. 3 On the other hand, an implied
warranty is an unstated assurance that the product is made for its intended purpose. 4 An implied
warranty is in addition to an express warranty. However, an implied warranty may be negated or limited
by an express warranty. There is no implied warranty if a seller states that the product is “as is”, “with
all faults”, or similar language.5
Home Warranties
A home warranty is a contract or agreement between the homeowner and the issuing company,
safeguarding the homeowner from expenses related to the repair or replacement of structural
components or appliances in the home.6 This protection extends to issues caused by normal wear and
tear or defects in these components or appliances.7
Home warranty contracts or agreements can be drafted by a Home Warranty Association licensed
under s. 634.303, F.S., or by an authorized insurance company permitted to offer coverage in this
category.8
Builder Warranties
A builder warranty, like a home warranty, is a contractual agreement between the builder and the
homeowner, shielding the homeowner from expenses related to the repair or replacement of structural
components in the home.9
Despite these similarities, there are distinctions in their coverage.10 While a home warranty typically
covers household appliances and systems, such as refrigerators and heating/cooling systems, and is
commonly associated with residential real estate transactions, a builder warranty—also referred to as a
structural warranty—is specifically provided by a builder to a homebuyer. 11 The purpose of the builder
warranty is to safeguard the homebuyer against significant structural defects in workmanship and
materials used during the construction of the new home by the builder.12
Magnuson-Moss Warranty Act
1 S. 681.102(22), F.S.
2
45 Fla. Jur 2d Sales and Exchanges of Goods § 156.
3 “An express warranty is created by an affirmation of fact or promise made by the seller to the buyer that relates to the good s, by any
description of the goods that is made part of the basis of the bargain, or by any sample or model that is made part of t he basis of the
bargain.” S. 672.313, F.S.
4
S. 672.314, F.S.
5
S. 672.316, F.S.
6 S. 634.301(2), F.S.
7 Id.
8 S. 634.303, F.S.
9 S. 634.301(2), F.S.
10 Quality Builders Warranty, What is a Structural Warranty?, https://qbwc.com/blog-news/what-is-a-structural-warranty/ (last visited
Dec. 18, 2023).
11 Id.
12 Id.
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The Magnuson-Moss Warranty Act (MMWA)13 is a federal law that governs consumer product
warranties. Passed in 1975, the Act requires manufacturers and sellers of consumer products to
provide consumers with detailed information about warranty coverage before and after the sale of the
warranted product.14
The MMWA defines three kinds of consumers:
a buyer of any consumer product;
any person to whom such product is transferred during the duration of an implied or express
warranty applicable to the product; and
any other person who is entitled by the terms of such warranty or under applicable State law to
enforce the obligations of the warranty.15
Home and Builder Warranties – Current Situation
The elective market in Florida allows a builder, seller, buyer, or owner of a home to choose whether
they would like to purchase a home warranty to cover against the cost of repair or replacement, or
furnishes repair or replacement, of any structural component or appliance of a home, caused by wear
and tear or a defect of a structural component or appliance. 16
Warranty associations and companies in Florida, including those associations selling home and service
warranties, and those companies selling motor vehicle service agreements, are regulated by the Office
of Insurance Regulation (OIR).17 OIR regulates the insurance industry in Florida. OIR is responsible for
the regulation of all activities in the state concerning insurers and other risk bearing entities, including
licensing, rates, policy forms, market conduct, claims, issuance of certificates of authority, solvency,
viatical settlements, premium financing, and administrative supervision. 18
While warranties are not considered traditional insurance products, OIR regulates warranty
associations and companies similarly to the way in which it regulates insurers. 19 Home and service
warranty associations must be licensed by OIR 20 and must maintain certain minimum financial
standards in order to do warranty business in Florida.21
The following chart reflects the number of licensed warranty associations in Florida as of December 6,
2023:22
Type of Association/Company Number of Licensees
Home Warranty Association 46
Service Warranty Association 101
Motor Vehicle Warranty Company 119
Total 266
13 15 U.S.C. §§ 2301-2312 (1975).
14
MMWA does not apply if a seller or manufacturer does not provide a warranty on their product. Jason Gordon, Magnuson Moss
Warranty Act – Explained, The Business Professor, Sept. 26, 2021, https://thebusinessprofessor.com/en_US/consumer-law/magnuson-
moss-warranty-act (last visited Dec 4, 2023).
15 O'Connor v. BMW of N. Am., LLC, 905 So. 2d 235, 236–37 (Fla. 2d DCA 2005); see also, § 2310(d) of MMWA provides that, “a
consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under th is title, or
under a written warranty, implied warranty, or service contract, may bring suit for damages…”
16 S. 634.301(2), F.S.
17 See ch. 634, F.S.
18 Florida Office of Insurance Regulation, Organization and Operation, https://floir.com/ab out-us/organization-and-
operation#:~:text=The%20Florida%20Office%20of%20Insurance,settlements%2C%20premium%20financing%2C%20and%20administ
rative (last visited Dec. 7, 2023). See also s. 624.308, F.S., and R. 69O, et seq., F.A.C.]
19 See ch. 634, F.S.
20 Ss. 634.303 and 634.403, F.S. Neither the Florida Insurance Code nor this section grants permission for any home warranty
association to conduct insurance business beyond what is specifically defined as home warranty or to participate in any other form of
insurance. Any engagement in alternative insurance types requires explicit authorization through a certificate of authority i ssued by the
office under the provisions of the Florida Insurance Code. S. 634.325, F.S.
21 Ss. 634.3077 and 634.406, F.S.
22 Data retrieved from OIR Active Company Search application, https://floir.com/CompanySearch/index.aspx (last visited Dec. 6, 2023).
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Home warranty providers must ensure that every home warranty is sent or delivered to the warranty
holder within 45 days after the commencement of coverage, subject to the insurer's or home warranty
association's premium payment requirements.23 Furthermore, all home warranty contracts are
transferable.24 The contract should explicitly inform the purchaser of their right to assign it within 15
days of selling or transferring the home. The home warranty company may charge an assignment fee
not exceeding $40.25 The home warranty may be assigned, as well from a home builder, who initially
purchased the warranty, to subsequent home purchasers. 26
Currently, several companies offer warranties covering structural components of a home in Florida;
however, Florida law does not regulate these warranties. Below are companies that provide builder
warranties:27
Manufacturer Coverage Offered
America’s 1-year coverage on workmanship
Preferred 1 or 2-year coverage on home systems
Structural 10-year coverage on structural defects
Warranty
1-year coverage for workmanship
2-10 HBW 2-year coverage for distribution systems
10-year coverage for qualifying structural
defects on newly built homes
1-year coverage for workmanship
Residential 7-year coverage for qualifying structural
Warranty defects
Company 10-year coverage for qualifying structural
defects
Effect of the Bill
The bill makes warranties covering structural components of a home automatically transfer with the
property when it is sold, rather than transferring it only if a separate assignment is made within 15 days
of the sale of the residence.
The bill also:
Defines structural components to include things such as the roof, plumbing system, electrical
system, foundation, basement, exterior/interior walls, ceilings, floors, stucco, or spray foam .
Applies the automatic transfer requirement to all express written warranties issued by the home
builder or purchased by the builder from a home warranty association.
Provides that the transfer of a warranty does not modify or extend the warranty’s commencement
date or its duration, nor is the scope of coverage expanded due to the transfer.
23 S. 634.312(2), F.S.
24 S. 634.312(1), F.S.
25 Id.
26 Id. Certain exemptions in the home warranty association statute cover cases where builders or appliance sellers offer standard
guarantees without extra charges, exclude service contracts with non -profits handling repairs, and accept contracts aligning with
Florida's Insurance Code for systems and appliances, excluding structural components. Individuals affiliated with a domestic insurer are
exempt if they avoid offering home warranties to Florida residents, but compliance requires the insurer to directly issue war ranties or
provide a specific policy. Non-compliance, as determined by the Office of Insurance Regulation, subjects the person to home warranty
association regulations. Additionally, the regulations do not apply to programs offering warranties on new homes if supporte d by an
insurance policy from a licensed Florida insurer, contingent on approval by the Office. S. 634.301(2), F.S.
27 America’s Preferred Structural Warranty, Coverage, https://www.apsw.com/. 2-10 HBW, Structural Warranties, https://www.2-
10.com/builders-warranty/structural-warranties/. Residential Warranty Company, Structural Warranties vs Extended Warranties –
What’s the Difference?, https://www.rwcwarranty.com/homeowners-2/structural-warranties-vs-extended-warranties/.
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Specifies that the builder is not transacting insurance when providing a compliant warranty to a
home buyer.
Prohibits the provision of indemnification against consequential damages resulting from the
failure of any structural component except through insurance.
Finally, the bill establishes that it is an unfair method of competition and an unfair or deceptive acts or
practice for a builder to fail to continue to perform obligations under a transferred home warranty
agreement.
This bill provides an effective date as of July 1, 2024.
B. SECTION DIRECTORY:
Section 1: Amends s. 634.312, F.S., relating to forms; required provisions and procedures.
Section 2: Amends s. 634.331, F.S., relating to coverage of property for sale.
Section 3: Creates Part IV of Ch. 634, F.S., relating to miscellaneous provisions.
Section 4: Renames Ch. 634 from “Warranty Associations” to “Warranties and Warranty Associations.”
Section 5: Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
There may be a positive economic impact for property owners and subsequent owners as they can
benefit from the remaining home warranty coverage for their residential real property without needing
additional paperwork due to the currently required separate assignment agreement. The home
purchaser could bear lower out of pocket costs if there is covered damage or wear and tear.
Home warranty associations and insurers may experience nominal increased costs due to the bill’s
prohibition on assignment fees.
D. FISCAL COMMENTS:
None.
III. COMMENTS
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A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect counties or municipalities governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
None provided by the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Section 3 of the bill was amended to fix a technical redundancy in the statute, which restates a
definition of a term already defined in s. 634.301(8), F.S., i.e., the term “listing period” already includes
the date the sale is closed.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On December 13, 2023, the Insurance & Banking Subcommittee considered the bill, adopted a