Construction warranty – what’s included? Private house owner perspective.
How to make sure your warranty offers you peace of mind?
A warranty is more than a guarantee
A guarantee is a promise or an assurance that specifies the quality or durability of a product or service. A warranty (or legal contract) describes the guarantees given, the conditions in which the seller is liable and the conditions that are excluded.
Construction warranties provide assurances for the buyer that the house bought meets certain expectations. Simply said, it’s a promise made that the house …
- … is good and healthy to live in
- … will be built within the agreed timeline and budget
- … is built with good workmanship (no defects)
- … is built according to the plans and specifications agreed
- … with good quality materials from trustworthy suppliers (which in turn offer guarantees)
What to expect in a contract?
There are 2 types of warranties which are always a part of the contract:
Implied warranties – the law provides contracts with certain protections regardless of if it is included in your contract or not. Every contract contains unwritten promises as it is impossible to specify everything. In this case the law assumes that the construction warranty guarantees that the building will meet a certain standard of quality. This can be shared into 2 categories:
- Warranty of habitability. This is an assurance that the structure of the house would not have any defects that would make it inhabitable.
- Warranty of construction. This means that the contractor must use a professional standard of skill in the construction process and the contractor would be liable to fix any deficiencies that become apparent.
Neither the warranty of habitability nor construction require the structure to be 100% perfect as they are not meant to deal with minor fixes or simply aesthetic issues. They are also not to be substituted for expressed warranties!
Express warranties – the warranty is written directly into the contract. A contractor’s express warranty takes precedence over an implied warranty (in the majority of cases). This means that what is written in the contract is what the contractor and buyer are liable for. A well-drafted warranty will describe precisely what is required of the contractor and it would give clarity around the circumstances and time in which a remedy is intended to be available. For example: The contractor gives a 5-year warranty (time specific) for structural defects to a home’s designated load-bearing elements (detail specific) which are: foundation, beams, structural walls, ground anchors, trusses, load bearing walls and all other elements designed to resist forces and moments. Nonetheless, it does not include doors, windows and non-load bearing walls; The contractor gives a 2-year warranty for minor defects which are not excluded from the warranty.
Unsurprisingly, minor defects are the most common disagreement when it comes to identifying what a construction defect is as the parties that are involved can have very different views. The parties typically include the builder, contractor, subcontractor, material supplier, product manufacturer and the buyer
Typical warranty exclusions
Contracts typically relieve the contractor from responsibility to repair defects or exchange building parts where the damage or defect results from:
- Normal wear and tear
- Alterations to the work not performed by the contractor
- For example: a plumber hired by the buyer
- Abuse or damage caused by third parties
- For example: when furniture movers damage the floors
- Improper use of equipment and materials
- For example: overheating with the sauna heater which would damage the equipment or the interior
- The owner’s failure to properly operate or maintain the house (including monitoring or servicing equipment)
- For example: not changing ventilation filters which would damage the ventilation equipment
Force majeure
Exclusions from force majeure, which are exceptional, unforeseen events or circumstances that are beyond the reasonable control of a party are also common. Depending on the provisions of the contract, the following may be considered to constitute force majeure:
- Wars and other hostilities (such as terrorism) which damage the house
- Exceptionally adverse weather
- Landslides
- Fires
- Strikes (other than by the contractor)
- Epidemics or pandemics (such as COVID interruptions to the supply chain)
- Natural catastrophes such as earthquakes, floods and volcanoes
How to make sure your warranty offers you peace of mind?
- Make sure the contractor has a solid reputation
- Before you sign a contract with your contractor, ask them to explain the warranty provided and its coverage – what’s covered and for how long, and what’s not covered. Make sure you are on the same page with the contractor
- Read every line of the contract. If you don’t feel confident with contracts, consult a lawyer specialising on contraction law
Before you move in! Go through the home together with the contractor to verify that it is built according to plan, with the features and inclusions specified in your agreement. Take notes and photos of all imperfections and discuss with the contractor how these would be dealt with.
Before signing the house over to the buyer, the builder would need to fix the imperfections according to the agreement and pass over instructions on how to service the systems of the house.