Various Types of Warranties

We hear conflicting versions about the length of time of a construction warranty.  Can you help clear up some of our confusion? 

Many other homeowners have asked this simple question, but the answer is very complicated. In some situations involving construction warranties the homeowner is going to need the help of an attorney.  And as the answer to this question is very complicated, we consulted with Bob Kozak of Robert C. Kozak, Esq., a local Prescott attorney practicing in construction law, mediation and arbitration. 

If by “construction warranty” you mean your ability to require a licensed contractor to fix a defect, there are potentially three answers: contractual warranties, implied warranties and the State of Arizona Registrar of Contractor’s enforcement time period.  Homeowners frequently talk about the “two year Registrar of Contractors’ warranty period” which is not a warranty, but rather the period of time within which the Registrar of Contractors can enforce construction workmanship and defect claims.  Defective or poor construction by unlicensed contractors creates many legal problems not addressed in this answer.

Contractual Warranties:    Some written construction contracts contain warranties, so the first place to start looking for a construction warranty is within the construction contract.  A contractual warranty provision will state that the builder is responsible for any defects in workmanship or construction for a specific period of time.  For example, the builder could include a warranty provision which warranties the roof from leaking for ten years or the concrete slab from shifting five years.  Contractual warranty provisions will generally limit claims for equipment such as appliances and HVAC units to the manufacturer’s warranty period, often one year.  If there is no warranty provision in the contract, the law gets a little more confusing: a claim for breach of a written contract must be brought within six years of the date of the contract, and these claims are ordinarily made for breach of the “warranty of habitability.”   For example, in cases where windows are found to be leaking due to improper installation and the defect is discovered 2 or more years after original construction an attorney should be consulted. 

Two Year Registrar of Contractors “warranty”:  This is actually the two year period of time within which a homeowner can make a claim to the Arizona Registrar of Contractors.  The ROC has workmanship standards that cover performance of those construction items of major concern to the buyer for the first two years after construction is completed, unless otherwise specified.  The buyer is responsible for owner-maintenance items.  The contractor’s responsibility under the workmanship standards does not extend to items which have been subject to owner neglect, modification or abnormal use.  If a complaint is registered, the ROC will then investigate the claim under   workmanship standards or defects, and where applicable will issue a corrective work order which will compel the licensed contractor to make corrections consistent with the ROC investigator’s conclusions.  These workmanship standards are subject to revision as methods of construction or materials used in construction continue to change.  If there is any conflict between the workmanship standards and building code requirements, the latter should prevail.  A contractor cannot avoid this two year enforcement period by trying to include language within the construction contract that it does not apply.  The ROC two year enforcement period begins to run upon the earlier date of actual occupancy or close of escrow for new construction, or for repairs and remodeling from the date of completion.  

Implied Warranty:  Occasionally a defect is not discovered until after the two year ROC enforcement period, or sometimes even after the six year contractual warranty period.  Such a defect could be known as a “latent defect.”  Issues involving latent defects fall into a very complicated area of the law involving the common law extending the time period to impose “implied warranties,” and a legislative maximum nine year “statute of repose.”    A latent defect is a defect in construction which is not known until it is fortuitously discovered much later.  Even the legislative maximum nine year may not apply depending upon the actual circumstances surrounding the discovery of the defect, such as the age of the home, maintenance or lack thereof, changes made by prior homeowners, etc.  In this situation the homeowner is absolutely going to need an attorney to help guide them through the maze of statutes, common law and factual considerations. 

This answer is intended to provide general information only.  Construction warranty problems are complex and require consultation with an attorney, especially if they advance outside of the construction contractor and/or are major issues outside of the ROC two year workmanship standards.  An experienced attorney will provide advice based upon the specific facts of the situation, and the applicable and most current statutes and case law.