Who pays for the home warranty when you buy a home in Flower Mound?

In Texas, the buyer purchases the home warranty and the seller reimburses that cost at closing, up to a dollar cap the two parties negotiate. That mechanic lives in Paragraph 7H of the TREC One to Four Family Residential Contract (Resale), form 20-19. The purchase is optional, the buyer chooses the provider, and the seller owes nothing if the buyer never actually buys a contract.

By Brian White | August 26, 2026

Almost every Flower Mound buyer asks this the same way: "Isn't the seller supposed to give me a home warranty?" The honest answer is no, at least not the way most people picture it.

Under Paragraph 7H of the current TREC resale contract, the residential service contract is something you buy, from a provider you choose, and the seller reimburses you at closing up to a capped dollar amount written into the contract. It's a conditional credit, not a gift. The word order matters more than it sounds like it should.

Here's why. The seller's obligation only triggers if you actually purchase the contract. If you never buy one, the seller reimburses nothing and keeps that money. I've watched buyers negotiate a $600 reimbursement, get swallowed by the move, never purchase the plan, and quietly leave $600 on the closing table. The cap is a ceiling on what the seller owes, not a check that writes itself.

The second thing 7H does is put the choice in your hands, and Texas is emphatic about it. TREC's own RSC-4 disclosure states in capital letters that neither a broker nor a seller may condition the sale of a property on your purchase of a residential service contract, and that you may choose any provider. If anyone in the transaction implies otherwise, that's a conversation worth having.

One more piece of housekeeping most buyers miss: these companies are licensed by the Texas Department of Licensing and Regulation, not by TREC. Oversight moved to TDLR on September 1, 2021. Before you buy, confirm the provider holds a current TDLR license.

What the reimbursement cap actually buys you here

Texas plans price higher than the national average, and the reason is not complicated. Your air conditioning runs hard for five months a year in North Texas, and central A/C claims are among the most frequent and most expensive claims warranty companies pay anywhere in the country. That risk gets baked into the premium.

Realistic numbers as of 2026:

• Annual premium in Texas: roughly $610 to $944 a year, against a national range of about $350 to $900
• Trade call fee: $75 to $125 per visit, owed every time a technician comes out, whether or not the repair ends up being covered
• Reimbursement cap commonly written into 7H: $500 to $700

Line those three up and the gap jumps out. A $600 cap against an $850 plan means you're covering the difference, plus a trade call fee every time something breaks. That isn't an argument against the coverage. It's an argument for filling in 7H with a number that reflects what a real plan costs in this market, rather than copying the $500 figure agents have been defaulting to for years.

Flower Mound's median sale price was $649,611 as of May 2026, down slightly year over year. On a home at that number, a $700 reimbursement is roughly one tenth of one percent of the sales price. In my experience it's a far easier ask than a price reduction, because most sellers treat a figure that small as a rounding error next to their net. It's one of the cheapest things you will ever negotiate.

Worth knowing where it lands in the stack: the reimbursement shows up as a credit at closing, alongside everything else in your buyer closing costs in Flower Mound. It is not money that arrives separately after you move in.

One more thing to plan for. The seller reimburses year one and only year one. Renewal in year two is entirely on you, and renewal pricing is frequently higher than the introductory rate you were quoted at closing. Decide up front whether you want the coverage as an ongoing line item in your budget or as a one-year cushion while you learn the house. Both are defensible. Drifting into an auto-renewal you never chose is the outcome to avoid.

What a residential service contract will not cover

This is where the disappointment usually lives, and it's almost always avoidable by reading the sample contract before closing instead of after a system fails.

Standard exclusions to expect:

• Pre-existing conditions. If a system was already failing when you closed, the plan generally won't pay for it. This is exactly why your inspection report and how you negotiate repairs after the inspection matter more than the warranty ever will.
• Code upgrades and permits. A covered repair can still leave you paying to bring the work up to current code.
• Per-system payout limits. A plan may cap A/C replacement well below what a full system actually costs in North Texas.
• Improper prior installation or poor maintenance. Both are common denial grounds.
• The trade call fee. Every visit, every time.

TDLR publishes a straightforward list of questions to ask before you sign: what exactly is covered, what the coverage limits are, whether a pre-existing condition voids coverage, what the service call fee is, who decides which company performs the repair, and whether the plan replaces an item that can't be repaired. Run that list against any plan you're considering, and against the plan a seller offers to reimburse.

If you're the one selling

If you're selling in Flower Mound and buying your next home in the same stretch, 7H lands on both sides of your ledger, and it's worth thinking about deliberately rather than reacting to it in an offer.

On the sale side, agreeing to reimburse is one of the cheapest concessions available to you. It reads as good faith to a nervous buyer, and it costs a fraction of what a repair credit or price reduction costs. Many providers also offer seller coverage during the listing period, which can pick up a system that fails while the home sits on the market. That's a real risk to manage, not a hypothetical one.

There's a timing point too. If you're closing on your sale and your purchase in the same week, you may be reimbursing a buyer for a warranty on the home you're leaving while separately deciding whether to negotiate one on the home you're buying. Those are two different line items on two different settlement statements, and they're easy to conflate when you're moving. Look at them as one combined number before you agree to either. That's the whole point of running a sale and a purchase as one coordinated plan rather than two transactions that happen to overlap.

What it does not do is substitute for disclosure. A residential service contract offered to a buyer never cures a known defect you were required to disclose, and it isn't a shield if a system was already failing. Handle the disclosure honestly and treat the warranty as what it is: a comfort item that makes the deal feel safer, not a patch over a problem.

New construction changes the answer entirely

If you're buying at Furst Ranch, Lakeside, or Whyburn, a residential service contract in year one is usually redundant. Builder warranties typically run one year on workmanship, two years on systems, and ten years on major structural elements. TDLR is explicit that a residential service contract is a different product from a builder's warranty and shouldn't be confused with one.

There's also a contract wrinkle. When you buy directly from a builder you're generally not on the TREC 20-19 resale form at all, which means Paragraph 7H doesn't exist in that transaction. The builder's own contract governs, and its warranty terms are what you're negotiating.

Where a plan starts earning its keep is year two and year three, as the workmanship window closes and appliances age past manufacturer coverage. That's the moment to price one, not at the builder's closing table. If you're still weighing the two paths, the tradeoffs run deeper than warranty coverage alone... here's the fuller comparison of new construction versus resale in Flower Mound.

Frequently Asked Questions

Is a home warranty required when buying a home in Texas?

No. The purchase of a residential service contract is optional, and TREC's RSC-4 disclosure states that neither a broker nor a seller may condition the sale of a property on your purchase of one. You can decline it entirely and still close.

Who chooses the home warranty company in a Texas transaction?

You do. Paragraph 7H lets the buyer purchase from any provider licensed by the Texas Department of Licensing and Regulation. Your agent can offer names, but the provider choice and the coverage decision belong to you.

What happens if I negotiate a reimbursement and never buy the warranty?

The seller keeps the money. Paragraph 7H obligates the seller to reimburse only if you actually purchase a contract, so that number is a ceiling on a conditional credit rather than an automatic closing credit.

Does a home warranty cover a system that was already broken at closing?

Generally no. Pre-existing conditions are a standard exclusion across providers, which is why your inspection findings and your repair negotiation carry far more weight than the warranty does.

How much should I ask the seller to reimburse in Flower Mound?

Price a real plan first, then write that number into 7H. Texas plans commonly run $610 to $944 a year, so a $500 cap that felt standard a few years ago often leaves you covering the gap out of pocket.

Getting this right before you sign

The short version: you buy it, you pick it, the seller reimburses up to a number you negotiate, and none of it happens automatically. The buyers who get real value out of Paragraph 7H are the ones who price a plan before they write the offer and set the cap to match, instead of accepting a default figure and discovering the shortfall later.

Every transaction is a little different, and the right call depends on the home's age, its systems, and whether you're selling and buying at the same time. That's exactly the kind of detail I walk clients through well before we're anywhere near a closing table.

If you're thinking through a move like this, schedule a free Move-Up Strategy Call ... thirty minutes, no pitch, just a clear-headed look at where you are and what your best next move looks like.

This article is general information, not legal, tax, insurance, or lending advice. Verify your specific numbers with your agent, your lender, your title company, and where appropriate a licensed Texas attorney.

About Brian White

Brian White helps families in Northwest DFW make their move-up cleanly, selling and buying in one synchronized step. He built BlueFuse Group on a simple standard: other-first service, proactive at every turn, faith and excellence in equal measure. Brian has been married to Tisha for 27 years and is dad to three adult sons. When he's not protecting a family's equity or untangling a tight closing timeline, you'll find him chasing a round of golf or at Valley Creek Church.

Schedule a Move-Up Strategy Call ... no pitch, just a clear-headed look at your next move.