Warranty

How a contractor warranty works

A written warranty is a promise in the contract: if a covered defect shows up during the warranty period, the contractor will come back and fix it at no charge. The warranty sets the rules for that promise, and a good one leaves little to argue about.

Most written warranties cover the same ground:

• What’s covered: workmanship, materials the contractor supplied, or both.
• How long it lasts and the documented date it starts, such as substantial completion or final payment.
• What’s excluded, such as normal wear, misuse, lack of maintenance and client-supplied products.
• How to make a claim: in writing, to whom, and how soon after the problem is noticed.
• The remedy: usually repair or replacement, at the contractor’s choice.
• Whether it transfers if the property is sold.

Alongside the written warranty, two other kinds often apply. Manufacturers warrant their products, usually covering the product but not the labor to replace it, and often only if it was installed and registered correctly. And in many states the law implies warranties into construction contracts, such as a duty to do the work in a workmanlike manner, whether or not the contract mentions them.

When a client reports a problem, the usual sequence is the same: get the claim in writing, visit and document the condition, decide whether it’s covered, and either fix it or explain in writing why it isn’t covered. Some states also have notice and right-to-repair procedures that apply before a homeowner can sue over a construction defect. Check your state.

A warranty’s length is separate from the time limits state law sets for bringing claims about defective construction. Those limits can run longer than a written warranty, and they vary by state. Check your state, or ask a construction attorney, before relying on a warranty’s end date as the end of your exposure.

Express, implied and manufacturer warranties

The three main kinds come from different places and are backed by different people. Clients often don’t know the difference until something fails.

Implied warranty rules vary by state, including whether they can be limited or waived and what language a waiver needs. Some states also have specific warranty rules for new homes. Check your state before writing a disclaimer, because one that isn’t allowed may simply not work.

Why warranties matter to each party

For contractors

A clear warranty limits your promise to what you meant to promise. It separates real defects from wear, damage and new requests, and it gives you a process to follow. Warranty work is also a real cost, so it belongs in your pricing like any other overhead.

For homeowners and clients

The warranty tells you what to do when something goes wrong after the crew leaves. Keep the contract, the warranty document and every manufacturer warranty together, register products that require it, and report problems in writing as soon as you notice them. A manufacturer claim may also ask for proof of purchase and the installer’s details, so keep the invoice with the warranties.

For general contractors and subs

General contractors usually require subs to warrant their work on the same terms the general contractor gives the owner. If your warranty to the client is longer than what your subs give you, the gap is yours to cover.

How to write and manage a warranty step by step

1. Decide what you’ll cover and for how long, and write it in the contract or a warranty document the client signs.
2. List exclusions plainly, including wear, misuse, missed maintenance and client-supplied items.
3. Set the start date to a documented event, such as substantial completion, and record that date in writing.
4. Check your state’s rules on implied warranties before adding any disclaimer.
5. Match your subs’ warranties to the one you give the client.
6. At closeout, hand over manufacturer warranties, registration details and maintenance instructions.
7. Log every warranty call with the date, cause, decision, time spent and cost.

Respond to every warranty call quickly, even when the answer is that the problem isn’t covered. A prompt visit and a clear explanation keeps the relationship intact, and the log gives you the numbers to price warranty work properly.

Warranty cost example with numbers

Say a remodeler completed 24 jobs last year with a one-year workmanship warranty on each, and logged 30 warranty calls across them. To keep the math simple, say each call took 4 labor hours, including travel. The remodeler’s burdened labor cost is $65 an hour, and receipts show $1,500 in materials used on warranty work.

The math: 30 × 4 = 120 hours, and 120 × $65 = $7,800. Adding materials gives $9,300, or $387.50 per job. Rounding up, the remodeler adds about $390 to each job’s overhead for warranty work, instead of paying for it out of profit.

The log also shows the calls weren’t all the same. A shower valve leaking eight months after completion was workmanship and covered. A cracked tile from a dropped cast-iron pan was damage, excluded under the warranty. A client-supplied faucet that failed went to its manufacturer. Sorting calls this way, with the warranty language in hand, keeps covered work quick and uncovered work billable.

Common warranty mistakes

• Promising a warranty verbally, or writing “fully warranted” without terms.
• Leaving the start date undefined, so nobody agrees when it ends.
• Copying a disclaimer of implied warranties that may not work in your state.
• Giving clients a longer warranty than your subs give you.
• Voiding a manufacturer warranty by installing outside the instructions.
• Forgetting to hand over product warranties and registration details at closeout.
• Not tracking warranty calls, so the cost never makes it into your pricing.
• Refusing a claim by phone without visiting or explaining the decision in writing.

A warranty works best when both sides read it at the start of the job, not after something fails. Clear terms, a documented start date and a quick response cover most of it.