New Home Warranties

New Home Warranties

New homes almost universally come with a one-year written warranty.  Despite rumors to the contrary, this is not required by Washington law, and it is up to the Contractor to hold up its end of the warranty.  The warranties themselves can be a bit confusing and usually include multiple formal steps before they are triggered. 

Money spent on warranty items comes directly out of the Contractor’s pocket.  Therefore, Contractors often ignore warranty requests, delay responding to them, or send unqualified personnel who perform superficial repairs.  Some Contractors continue to promise to fix issues in an attempt to get past the end of the warranty period.      

Often, the Contractor will attempt to repair the issue more than one time without success.  This is a giant, blinking red flag that there is something wrong with the building that cannot be repaired without removing a significant portion of the exterior.  Further, it is likely that the problem is not just in one location, but all over the building.  These hidden issues are the heart of construction defect claims.

The dirty little secret is that the Contractor is incentivized to build the building as cheaply as possible.  There is a market price that the home will sell for and every dollar the Contractor saves on building the building is a dollar in the Contractor’s pocket.  Unlike in a commercial building, with an Owner issuing thousands of pages of plans, specifications, and contracts, in a Townhome, the Contractor is generally free build how it wants.  The nice floors, counters, and other touches that buyers love are a tiny fraction of the build cost.  Townhome Contractors do not pay architects or engineers to oversee the work but rely on their own people to “get ‘er done.”  The local building department’s inspections are cursory, at best.

Other claims

Fortunately, an Owner’s rights against the Contractor are not usually limited to the warranty.  This is true even if the Contractor attempts to limit those rights through a limitation of liability clause.  To be effective, a limitation of liability clause has to say the specific problems that it is limiting the liability of.  In the case of hidden construction defects, the Contractor does not know they exist; the Contractor thinks he builds the best buildings ever, and will tell anyone who will listen.  Therefore, the Contractor never includes hidden construction defects in the liability limitations. 

The Owner may also have a breach of contract claim based on other promises and a claim for a breach of the implied warranty of habitability, which is a non-contract claim reserved for substantial issues, such as hidden construction defects.  Unfortunately, hidden construction defects are not detectable visually, but require a more robust investigation. 

Don’t lose your rights

The amount of a time that an Owner has to file a lawsuit varies with the type of claim.  The recent Washington Supreme Court decision of Tadych v. Noble Ridge Construction established that the contractor’s attempt to limit the claims period to one year was not enforceable.  The Court decided that the six-year period in RCW 4.16.310 applied instead.  A three-year period typically applies to implied warranty of habitability claims.

Owners are encouraged to investigate their new construction homes early to determine the absence of presence of construction defects.  If your home, likely your largest asset, suffers from hidden construction defects, it is better to know before your rights against the Contractor expire.