How to Write a Successful Construction Warranty Provision, Explained by a Lawyer

Often when a client comes into our office with a contract, their construction warranty provision is anywhere from a single sentence to a short paragraph. Sometimes it’s simply, “We warrant all labor and materials for a year,” compared to the page-and-a-half warranty provisions that our office drafts. 

When we see a short warranty provision, we ask the contractor several questions. The answers to these questions must be present in the warranty provision, but they often are not.

If it is not explicitly written down, it is not binding. 

Below are a few of these questions that we like to ask contractors to help them identify potential pitfalls in their warranty provision.

What does the warranty cover? 

Typically, our client’s first draft warranties are for labor and materials. 

While it makes sense that the warranty would extend to labor, why would a contractor want to warrant materials? Unless the contractor makes the materials, the contractor is providing a warranty for products made by a third party that the contractor has no control over. 

In addition, what happens if there is a warranty for materials and the company that produces the materials goes out of business? 

One of our clients experienced this exact scenario. A contractor gave a lifetime labor and material warranty for triple pane windows. The company that made the windows filed for bankruptcy a few years later. Approximately 10 years after installing the windows, they began to fail. 

Our client, one of the leading window installers, became inundated with warranty claims and no company to get replacement windows from without a huge cost. Had the warranty only been for labor, my client might not have had to consider bankruptcy. 

It is also important to consider whether the warranty will cover normal wear and tear or items that require the owner to perform regular upkeep or maintenance. A contractor should not have to make a repair due to the owner’s negligence or for items damaged due to regular and routine use. 

If it is not explicitly written down, it is not binding. 

How does an owner go about making a claim under the warranty? 

Making this process clear in the warranty provision can prevent a question about when the contractor must investigate the claim.  

For example, what happens when the claim arose under the warranty, but the owner did not bring it to the attention of the contractor until after the warranty period expired? Is there coverage? 

This situation can be easily clarified by giving the owner specific instructions on how to make a timely claim. For example, it can be required that the owner inform the contractor of the claim in writing, with specificity, within a set number of days after the claim arises. 

The contractor can also reserve a period of time to review the claim and decide if it falls under the warranty.

Once the repair has been made, does the repair have a warranty period? 

Does the repair continue under the unexpired portion of the original warranty, or does it have its own warranty clock starting from the date of the repair? 

Imagine an owner making a claim six months prior to the expiration of the one-year warranty. If a contractor doesn’t specify, the terms of the warranty are unclear. The owner can claim there is now a one-year warranty on the repair labor while the contractor claims the repair is only warranted for the remaining six months of the warranty. 

If this is not clearly stated, the contractor might have to warrant the repair beyond the intended warranty period.

What happens if the home is sold before the expiration of the warranty period? 

Can the owner transfer the warranty to a buyer? Or does the warranty only apply to the original owner and is not transferable to subsequent owners? 

Most of our clients want to avoid a situation where they must do construction warranty work for someone they did not initially contract with. A clear provision stating that the warranty is not transferable can help avoid a dispute.

By considering these few simple questions, a contractor can have a construction warranty provision that offers strong protection for themselves and sets clear guidelines and expectations for both parties. 

The addition of these concepts can completely transform the warranty from an often-overlooked provision that could lead to unforeseen situations to an effective and clear provision.

Thomas Croessmann is the managing partner of Croessmann & Westberg, P.C., a construction law firm that focuses on representing residential and commercial contractors with all aspects of their business. Thomas Croessmann can be reached at [email protected] or by phone at (703) 483-3550.