CONSTRUCTION WARRANTIES and GUARANTEES

View all KEY CONTRACT CLAUSES       View all CONTRACT articles

Warranties are important since defects in construction often don’t show up until well after the last check has cleared. Common ones include drywall cracks and nail pops, concrete and tile cracks, lumps in the carpeting, sticking doors and windows, and leaky flashings, to name a few. Yet another reason to work with a reputable contractor is that he is more likely to honor the warranty and return to fix things, even after the typical one-year warranty has expired.

The terms warranty and guarantee are often used interchangeably and have the same meaning legally. However, as commonly used in construction law:

• A warranty is a written promise (or guarantee) by the manufacturer or contractor to repair or replace a defective product or correct defective workmanship. Most warranties have time limits and other restrictions (limited warranty).
• A guarantee is a more general term, referring to any promise by a manufacturer or contractor that a product or service will be free from defects.

Express vs. Implied Warranties

A warranty can be “express” and written into a contract or “implied” by federal or state laws. For example an Implied Warranty of Merchantability is part of the UCC (Uniform Commercial Code), which is adopted by most states. A warranty of merchantability guarantees that a product conforms to ordinary standards of care as similar goods and that it is fit for the ordinary purposes for which it is used. For example, a garage door that does not open, a chimney that does not vent properly, or a deck that wobbles would most likely not meet this standard, allowing the owner to sue, if it came to that.

All contracts should contain an express warranty that spells out the contractor’s responsibilities after the job is completion. View the Express Warranty clause in our Model Construction Agreement.

Warranty Limitations

Most guarantees and warranties are limited for a period of time and are non-transferrable. Also, all warranties have have limitations and exclusions that, in some cases, render the warranty promise pretty useless. For example, many building product warranties are for the materials only and some further limit their exposure by using a prorated value. Many roofing warranties follow this pattern – so, if your “30-year roofing” fails in 10 years, you may get 50% of the cost of the shingles, and nothing for the labor to install them. Since labor accounts for about two-thirds of the cost of replacement, you may end up with $1,000 toward a $7,000 roofing job.

For example, I recently contacted a window manufacturer about two large 10-year-old windows that had “fogged” due to broken seals in the insulated glass panels. The windows were guaranteed for 20 years, but the seals only for 10. Even if the glass were still under warranty, it would cover only the materials. The cost to remove the sash, install the new glass, and replace the sash was not covered. The same material-0nly limitation is true for a wide variety of building products, including paints and coatings where the labor cost far exceeds the material cost.

Another important limitation of most  product and material warranties is that the product must be installed according to the manufacturer’s instructions or the warranty is voided. A manufacturer who is intent on rejecting a warranty claim can usually find some evidence that the installer did not follow every recommended procedure.

The Contractor’s Responsibility

Since you are not in control of the installation, and that it is difficult to establish how something was installed a number of years ago, it’s in your best interest to have the contractor’s warranty cover both the materials and installation. Since the contractor purchased the materials, it should be his responsibility to negotiate with his suppliers, manufacturers, or subcontractors over warranty issues. He also has much more leverage than you with a manufacturer’s rep or subcontractor.

The general contractor’s warranty should also cover all subcontractors’ work, since the contractor hires them, supervises their work, and has a contractual relationship with them. Also, in some cases, it’s unclear which subcontractor caused a problem. Were cracks in the drywall caused by the framing contractor or the drywall installers? It shouldn’t be your problem to figure this out. Plus, your contractual relationship is with the general contractor, not the subs.

Look for at least a one-year warranty on all products and materials installed by the contractor. Most contractors will exclude work or materials provided by the owner or by workers hired independently by the owner (my cousin the plumber), which is a reasonable limitation.
The AIA105 (short-form) Warranty clause reads:

8.5 The Contractor warrants to the Owner and Architect that: (1) materials and equipment furnished under the Contract will be new and of good quality unless otherwise required or permitted by the Contract Documents; (2) the Work will be free from defects not inherent in the quality required or permitted; and (3) the Work will conform to the requirements of the Contract Documents.

Extended Warranties

In many cases, products come with warranties that extend for 10 years or more, well beyond the contractor’s one-year warranty. So when roofing shingles blow off or windows fog up five years after completion, you are left to deal with the manufacturer on your own. This is where the “weasel words” in small print will usually get you. Common limitations are that the manufacturer is responsible for materials only, and those may be further limited by prorating. It’s like a car manufacturer mailing you an engine part that fails – but you have to rip the engine apart to install it.

In addition, the warranty on most products becomes void if the installer did not follow the manufacturer’s instructions. If your contract included the clause that the contractor was to “Install all products and materials according to “manufacturer’s written instructions,” then you may have a leg to stand on if you are denied coverage for that reason. For example, many roofing shingles require felt paper, or equivalent, to be installed under the shingles (a good idea, whether required or not). If your contractor skipped that step and the shingles prematurely buckled and cracked, you would have a strong case to have the original contractor re-do the job at no cost to you.

In some cases, it’s clear-cut that the installer did not follow the instructions. For example, if a roofing shingle requires a vent space below and there is none, then the designer or contractor is at fault. If the exterior trim required that all cut edges be sealed and painted, it should be easy to determine. However, it’s often not clear cut. Was it over 50°F when the paint or adhesive was applied? Was the paint applied to wet wood or below the recommended temperature?

Warranty Procedures

Even though warranties cannot completely ensure that problems will be fairly addressed, you should do everything you can to properly support your claim. That is, make sure you keep the warranties organized and in a safe place, document the dates that the product or material was purchased, installed, and put into use. Pay special attention to high-cost items  such as windows, heating and cooling equipment, major appliances, synthetic and composite products (decking, siding, exterior trim), bathtubs and showers, and roof shingles – all products that I’ve seen fail over the years.
Read the fine print and take any necessary steps to keep the warranty valid, such as:

In order to qualify for the benefits under and thereby validate this warranty, the original purchaser  must fully complete the attached certificate of registration and mail it to AAA Products Corporation, 100 Main St, Anywhere USA, within thirty (30) days from date of original purchase.

In the event of a problem, document it right away with date-stamped photos, and send a letter to the contractor and/or the supplier or manufacturer, depending on the item and time frame, and keep a copy for your files. It’s always best to start with the contractor, even if the contractor’s warranty period is over. A conscientious contractor will want to know if there are problems with his workmanship or products he has installed, whether or not he is responsible. Even if his warranty has expired, he may choose to help out in the interest of providing good customer service (and getting more work and referrals from you). If it is a product problem, he may have an ongoing relationship with the supplier or regional manufacturer’s rep that can be a great help in reaching a satisfactory outcome.

Bottom line: Warranties can be useful in some circumstances, but often fail to provide true compensation for defects. As the old saying goes, warranties are only as good as the people who make them. The best guarantee that products will perform as planned is to buy quality products with a known track record from a company known to stand behind its products, and then have them installed by a competent, conscientious contractor. You’ll have far fewer problems and a greater likelihood of getting help and satisfaction from suppliers and installers if things do fail over time.

Read more on Warranties and Building Defects.

View all KEY CONTRACT  CLAUSES       View all CONTRACT articles     Back to Top