As news that homebuilder Estridge Group was closing its doors spread through neighborhoods, homeowners started to worry.  What about my home warranty? Is it still good?  Unfortunately, the answer to that question isn't exactly cut and dry, but here it is in a nutshell:

If the roof caves in on your Estridge home, you're probably covered.If the window gets stuck or a nail pops, you may be out of luck.

All Estridge homeowners were provided a 10-year structural warranty covered by a third party -- Residential Warranty Co. -- when they purchased their house. That will remain intact, as will the manufacturer's warranty.

However, Estridge provided homeowners its own, three-year, top-to-bottom warranty that basically covered every little creak and crack in every little nook and cranny of the house.

That's the warranty that has about 600 new homeowners covered by it worried, and rightfully so.

"Basically the thing that is up in the air is if they have a nail pop or something like that, what are we going to do about that?" said President Paul Estridge Jr. "Our ability to continue that warranty, we have not been able to determine that."

However, an attorney who specializes in new home construction said it's likely that warranty won't be upheld.

"There's no way a company that's out of business could do the work," said Tom Bedsole, a partner at the law firm Frost Brown Todd.

Estridge said homeowners should continue to call with their fixes, and the company will do "everything it can." Paul Estridge is still hoping the company his father started in 1967 won't be out of business for long.

Although it did halt sales operations and lay off 11 sales reps Monday, Estridge said he continues to seek investors to raise $2 million to secure a line of credit to continue building homes.

"I'm completely and totally focused on finding the capital for our company in some form or another to continue building homes," he said, adding he is in talks with two investors.

Right now, Estridge will finish the 41 homes it has under construction and try to sell about 20 homes that are completed or near completion.

The 25 new homes it had sold will not be built. Those owners have several options, Estridge said Monday.

Those include getting their deposits refunded, having Estridge help them find a new builder or building the home through Estridge's custom homebuilding division, Custom Galleries. For the third option, homeowners would need to finance the building upfront.

Should the shuttering of Estridge's sales operations discontinue the warranties, it will end one of the best warranty programs of any homebuilder in the area, said Laura Musall with F.C. Tucker in Fishers.

"This was a great program because they would do scheduled inspections and fix anything that had gone wrong, even nail pops," Musall said. "It really is unheard of in the building industry and a huge benefit to homeowners. I don't know another builder that does this."

But the loss of warranties won't be the only loss for the Indianapolis market.

Estridge becomes the fourth big-name local builder to go out of business in the past three years, following Davis Homes, C.P. Morgan and Hansen & Horn.

"Obviously, losing anybody, whether a local or not, hurts the marketplace," said Steve Lains, CEO of the Builders Association of Greater Indianapolis. "But every time you lose another local builder, it takes another choice away from the people."

Source: http://www.indystar.com/apps/pbcs.dll/article?AID=2011103220315