In my last blog, I discussed the punch list aspect of your construction project. This stage typically takes place as soon as you reach what’s called “substantial completion.” It’s at this point that the building can be used for its intended purpose. However, there are still some touch-up items that need to be addressed before the structure is considered to be finished.
Once every issue on the punch list has been resolved, the project moves into the post-construction phase. Basically, this is the warranty period. But, every warranty is unique and must be explicitly defined in your construction contract. Specifically, the warranty identifies the rights, responsibilities, and remedies of the parties in the post-construction phase.
There are six parts to a warranty:
3. Excluded Events
All work is quality workmanship.
All work conforms with contract specifications.
The warranty consists of a 12-month duration.
Although a warranty is designed to cover repairs in the post-construction phase, certain exclusions still exist. The exclusions are:
- Consequential damages
- Owner costs caused by defective materials or the replacement of defective materials
- Damages not avoidable by exercise of reasonable care
- Damages caused by excluded conditions
- Structural damage to walls caused by shifting of the property
- Moisture and/or humidity
- Nail pops
- Damages caused by non-contractor abuse, owner neglect or normal wear and tear
Some circumstances do not qualify for warranty protection. These situations are:
Events occurring after the 12-month warranty period
Events occurring due to owner violation of the warranty
As I mentioned earlier, a warranty has limitations. Even though you may have a warranty for a particular construction project, coverage is still restricted by the contract. These limitations include:
- Liability of contractor limited to total labor and material cost to replace defective or nonconforming work
- Warranty replaces all other warranties
- No verbal agreement or custom and practice will vary limited scope of warranty
- No change to warranty without contractor consent
- No consequential damages
- Warranty not transferable or assignable
- Contractor liability is limited to remedies in warranty
Claims are a key element of any warranty. However, conditions must be met based on the contract before any action is taken. These include:
- Owner claims are barred unless owner notifies contractor of defect within five calendar days of discovery of same
- Upon notice, contractor has reasonable time to inspect
- Contractor will promptly perform obligation of warranty
- Contractor not liable for owner cost to replace defective material unless contractor issues advance written consent
A warranty can be transferred. But there are often stipulations within the contract, including:
Owner may transfer the warranty
Requires prior written approval of contractor
For the past several weeks, I’ve explained why it is so critical to keep detailed paperwork for your construction projects. From the contract to the actual construction to the post-construction phase, you should now understand the value of documenting each stage as it occurs with the appropriate forms. When this paperwork is in place, your project can proceed smoothly, even though issues may arise in the construction itself. As long as you stay on top of the necessary paperwork throughout the duration of your project, you can feel confident that your rights are protected at every phase.
One Final Note
The construction paperwork is a critical safeguard and should always be examined carefully. So before you sign any agreements, it’s always in your best interest to have an attorney look over the documents and advise you on the most appropriate route to take.