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New Home Insulation Disclosure Addendum

Addendum for New Home Insulation Disclosure - Required by Federal Trade Commission

This form is a New Home Insulation Addendum to a Real Estate Contract, wherein the parties agree that the insulation in the dwelling will comply with certain standards. This addendum should be signed contemporaneously with the general Contract.

What is a New Home Insulation Disclosure Addendum?

If you are planning to build or purchase a new home, you must ensure that the house has all the energy saving criteria required by statutes and building codes before signing a real estate purchase contract. Minimum conditions for insulating a new home are specified by state statutes and regulations.

Pursuant to the Federal Trade Commission's (FTC) new home construction insulation rules, persons selling new houses must furnish or disclose in a contract for sale, information about insulation installed in the houses. Such a rider in a real estate contract is generally known as new home insulation addendum.

The FTC rules provide that sellers, builders and real estate brokers have to disclose details regarding insulation in a contract of sale. Further, in all earnest money agreements and listings, brokers must specify the insulation particulars.

Insulation requirements that have to be disclosed in a real estate transaction are R-value, thickness, and form of insulation that will be installed in a new house. FTC regulations specify that builders have to guarantee that floors, exterior walls, walls in other areas of the home, and ceilings are insulated with proper material, and that insulation to a thickness of a particular standard are maintained. R-value is used to determine a material's heat conductivity. A higher R-value indicates higher insulating qualities of the material.

Elements that have an effect on the nature of insulation while constructing a building include:

  • climatic condition of the place where the building is constructed
  • ease of installation of insulation
  • ease of replacement of insulation at end of life
  • cost effectiveness of insulation
  • impact of environment and external factors on insulation

A home insulation addendum guarantees that insulation in a house construction complies with statutory standards. An insulation disclosure addendum must be signed simultaneously with the contract of sale.

Failure to make requisite new home insulation disclosures constitutes a deceptive trade practice and the person who fails to make necessary disclosure or makes false disclosures will have to pay fine as ordered by the FTC. Builders or contractors may use the services of a third-party inspector in order to make sure that proper insulation is used in the construction of a building and that the insulation is properly installed.


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