Why Developers Should Track All Warranty Claims
Does the Responsible Developer track all warranty claims? Absolutely, it is just good business!
It is axiomatic that when a development project is complete that there are a number of warranties that must be tracked and managed as part of the post project completion entitlements and obligations. This risk management process applies to all projects, public and private, and depending on who you are in the project hierarchy, it is a continuation of the project financial analysis.
Yet many parties to the project myopically focus solely on the contractual written warranty period, which typically is one year. The Responsible Developer, however, tracks all relevant warranty periods including those express and implied at law warranties. Why? Because anything less may just be throwing money away. Who can afford to do that in these challenging economic times?
The actual process is relatively simple. Once a project achieves substantial completion, the following warranties should be calendared and tracked:
1. 90 days prior to expiration of contractor's 1 year warranty.
2. 90 days prior to expiration of any manufacturers' warranties.
3. 180 days prior to expiration of all (3,4 and 6 year) contract statutes of limitation and repose.
The reason you calendar these dates is so that you can inspect and test the work, materials and systems in your project for any premature failures or damage and give your self enough time to document it and provide that written information to the party the owes you the warranty obligation-before that party is immune from suit.
Some public developers may be less concerned about the expiration of statutes of limitation because Washington law provides that where the work was for the benefit of the state the six year statute of limitations does not apply. A public entity, however cannot afford to rest on that laurel too long, because many contractors are either corporations or limited liability companies that after the project may become dissolved and immune from suit. While there are artful ways to draft around such future warranty impediments in the contract, developers can easily monitor the status of their contractor's legal status by using the information maintained by the Washington Secretary of State and Labor and Industries.
The reason you as the Responsible Developer need to make this effort is so that in the event a post completion inspection reveals latent defects in a product or work, you will be able to timely make a claim and either obtain repairs, insurance money or both. If you fail to calendar these dates or make the effort, then you may just be throwing money away. Imagine being asked by tax payers or investors why no one had the foresight to include this analysis as part of your project.
Well now you know what the Responsible Developer does as an integral part of maximizing the value of all of the warranties it may be a beneficiary of.
Some of our prior posts included information about new energy efficient “Net Zero” Homes and California’s landmark decision to mandate a Green Building Code (CALGREEN). However, there may be unintended financial consequences when code officials mandate green and more energy efficient homes. 