Your legal duties as a contractor do not cease when a job is done. Most construction contracts include warranty provisions that might continue a year or more after the project is handed over to the owner. Knowing the duration of warranty required for each job, as well as how the law and your contract affect each other, can help you avoid some common disputes.
Final Payment vs Warranty Work
Legal disagreements often occur when a warranty claim is filed before a subcontractor gets the final payment. At this point, subcontractors don’t want to go back to do warranty work until they’ve received the final payment. However, most standard contracts are pretty straightforward on the subject. A very common provision, as the one below, states that the job isn’t done until the punch list and any claimed warranty work is complete, giving the owner or general contractor the authority to withhold final payment until that time.
This subcontract shall not be considered completely performed until all punch list and warranty claims hereunder are fully satisfied, irrespective of any payment disputes between subcontractor and contractor and/or any unpaid balance claimed by subcontractor.As a subcontractor, you can address the final payment issue and also limit the scope of your warranty by adding a provision similar to this:
Subcontractor does not warrant that project will function as intended or envisioned or that the design professional has done its job correctly. Any warranty shall be void if the total subcontract price is not paid in full or if the work or materials supplied by subcontractor are abused, not maintained, or modified in any way.Length of Warranty
Another point of consideration is the duration of the warranty. The industry standard is one year, however depending on the jurisdiction and type of project, the warranty obligation might continue up to three years or more. Instead of using the standard one year, many subcontracts measure a warranty period by time scenarios. A typical provision could read:
Subcontractor shall warrant and guarantee to contractor and owner and any and all successive owners all work performed and materials and equipment furnished under this subcontract against defects in materials and workmanship for the longer of (i) one (1) year from the date of final completion of the project, or (ii) for any longer period if so specified in the contract documents or (iii) for any applicable period as required by law.”Let’s take a closer look at each of the warranty time scenarios described above:
1. A year after completion
As a subcontractor, your one-year warranty period doesn’t start once you’ve completed your portion of the work; it starts once the entire project is finished. So, if your work is completed three months before the rest of the project, your warranty will extend another 15 months after you finish your part of the job. This is why “substantial completion of subcontractor’s work” is preferred to “final completion of the project” for any subcontractor.
2. Longer period as specified in the contract documents
There are other documents that when “incorporated by reference” become part of the subcontract. One of those documents is the prime contract. If there is a reference to a longer warranty in the prime contract or any other contract document, you as a sub are obligated to that warranty period, unless you specify that in the event of a conflict, the subcontract controls.
3. Applicable period as required by law
In some cases, a warranty period may be required by law. One example is Florida’s Condo Warranty Statute, which stipulates a warranty of up to three years for certain trades. So even though your contract may have you providing a one-year warranty, the law may require you to meet a longer warranty period.
A construction warranty is a contractor’s promise that what was built is right. Standing by your work also means correcting any issues that could occur during the warranty period. Make sure you are aware of the different situations that impact your warranties to both meet your legal obligations and protect your rights.
This post originally appeared on sage.com
