The Basics of Builder Warranty Claims and Defenses
Updated: Jun 6
Try as they might to provide the best possible workmanship and adhere to exceptional quality standards, Minnesota builders may still find themselves the reluctant recipients of complaints regarding the quality of work. In the event that a customer levels a defect complaint, contractors and subcontractors need to be ready to defend both their work and their livelihood. Having lived the hard-hat life, the team at MNCLS learned the ins and outs of builder warranty claims — as well as how to defend against them. In this blog, MNCLS will discuss warranty claims and some effective ways to defend against them. What Are Builder Warranty Claims? Under Chapter 327A of Minnesota’s Housing Statutes, new homes are protected by one, two, and 10 year warranties:
A 1-year warranty regarding defects resulting from faulty workmanship and defective materials on account of noncompliance with proper building standards;
A 2-year warranty for defects from faulty plumbing, electrical, cooling, and heating workmanship as a result of noncompliance with proper building standards, and;
A 10-year warranty for major construction defects on account of noncompliance with proper building standards.
These warranties are typically subject to interpretation, and there are limitations to contractor liability. For example, homeowners are expected to notify the contractor of a defect within six months of the discovery of the defect — and damage not reported in this time frame can release a contractor from liability. Defending Against a Minnesota Warranty Claim Warranty claims can be complex and highly technical, and if one is leveled against you your best bet will be calling in skilled construction attorneys to determine which type of defense applies to your specific claim. Some potentially effective defenses include: Spoliation This is one of the most common mistakes that homeowners make. They think that the work is defective, don’t notify you of any issues, hire a different contractor to perform the repair work, and then turn around and hand you the bill. If a homeowner does this, there is a high likelihood that their claims will be barred based on a spoliation defense. You have the absolute right to be notified and inspect the alleged issues within a reasonable time, and you should ALWAYS do the inspection — preferably with some guidance from MNCLS — beforehand. Spearin Doctrine Originating from the 1918 Supreme Court Decision, United States v. Spearin, the Spearin doctrine can help shift the blame away from contractors in the event that plans presented by the owners are deemed inaccurate. If the contractor facing a warranty claim is able to demonstrate that the construction defect is due to the plans themselves, the contractor may be able to skirt liability. Some construction contracts may ask contractors to waive their Spearin doctrine defense, so be sure that your construction contract is protecting your business before putting pen to paper. Lack of Causation In the event that a contractor did deviate from the homeowner’s plans, an owner may level a warranty complaint due to damage — but contractors that can prove lack of causation may be able to avoid liability. For example: A contractor uses a different window component and the home accumulates water damage, but the actual cause of the leak is due to a defect in the roof. In this case, the contractor may be able to avoid culpability. Discharge by Prior Material Breach Contractors are all too familiar with payments that are slow, late, or missing altogether, and these payments may be the defense that contractors need to avoid liability for warranty claims. In the event that this delayed payment hindered the construction — resulting in the claimed defects — can release a contractor from their obligation, but this is largely dependent on the terms of the construction contract. Mount Your Defense With MNCLS The above warranty claim defenses are far from the only defenses available to construction professionals, and not every defense will protect every contractor. In many cases, the best defense is a carefully drafted construction contract, and the team at MNCLS can make sure that you’re set up for success — and that you have the defense you need should a warranty claim arise. To make sure that you and your livelihood are properly protected, reach out to MNCLS by completing our contact form or give us a call at (651) 484-4412.