A home warranty, if you have an active one, is another small detail worth understanding when you sell, since you may be entitled to a partial refund for coverage you paid for but will not actually use once you no longer own the property.
Why a Refund Might Exist at All
Home warranty coverage is typically purchased for an annual term, paid upfront, covering a full year of protection on major systems and appliances. If you sell partway through that term, you have technically paid for coverage extending beyond your ownership, which means a prorated refund for the unused portion is often available.
How This Differs by Provider
Not every home warranty company offers refunds for early cancellation, and those that do vary in how they calculate the prorated amount, some offer a straightforward proportional refund, others apply a cancellation fee that reduces the amount you actually receive back.
Checking your specific warranty provider’s cancellation and refund policy, usually available in your original contract documents or by calling their customer service directly, tells you exactly what to expect for your specific situation.
What You Actually Need to Do
Similar to a homeowners insurance policy, this refund typically does not happen automatically. You generally need to contact your warranty provider directly, request cancellation effective on your closing date, and specifically ask about a refund for the remaining unused portion of your coverage term.
Why This Sometimes Gets Overlooked
Amid everything else happening around a closing, canceling and requesting a refund on a home warranty is an easy detail to simply forget, especially since the dollar amount involved is usually modest compared to the overall transaction. It is still your money, and there is no reason to leave it unclaimed.
Whether to Transfer the Warranty to the Buyer Instead
Some home warranties are transferable to a new owner rather than being canceled, and depending on your situation, offering to transfer remaining coverage to the buyer, rather than canceling for a refund, is sometimes a reasonable goodwill gesture, though this is entirely your choice and not something you are obligated to offer.
How This Fits Into Your Overall Closing Picture
Utility transfer fees represent another small cost worth understanding alongside a potential warranty refund, since together these minor details give you a more complete, accurate picture of your actual net proceeds beyond just the headline offer number.
A Small Detail Worth Not Forgetting
This is not going to change your decision to sell, but a quick call to your warranty provider before or right after closing ensures you actually get back whatever portion of your payment you are legitimately entitled to, rather than letting it slip through the cracks during an otherwise busy closing process.
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