JSH Reporter Summer 2015 - Page 8

CONTRACTORWARRANTIESARTICLE 008 “Contractors are subject to different types of warranties and different time frames that they may have to honor such warranties. An understanding of the differences and the applicable periods of time is critical when responding to demands from owners making ‘warranty’ claims.” the repairs within a reasonable amount of time after the request. The timing of the contractor’s response is somewhat subjective, and may depend on the particular circumstances of the alleged defect and the nature of the repairs. If the contractor does not timely respond to the notice, the contractor may have breached the call back warranty. From an owner’s point of view, the notice should contain more than just an identification of the items needing repair. It should also inform the contractor that if it does not make the repairs, the owner will do so itself and charge the contractor for the costs. It should also request confirmation from the contractor that the work will be performed and inform when the contractor will do so. The contractor, on the other hand, should promptly respond to the request and inform the owner of its intentions with respect to the requested repair work. A contractor ignores a request at its own peril. Registrar of Contractors’ Corrective Work Period In addition to call back warranties, Arizona contractors are also subject to the jurisdiction of the Registrar. For instance, if an owner is unable to get a contractor to make repairs after a call back period ends, that owner can file a complaint with the Registrar if it has been two years or less since the contractor performed the work that is the subject of the complaint. The Registrar will investigate and may issue a corrective work order to the contractor, requiring the contractor to make repairs listed in the order. Of course, the contractor may request a hearing if it disagrees that corrective work is needed. However, the contractor cannot use the expiration of a contractual call back warranty to avoid the Registrar’s order. See A.R.S. Sec. 32-1155. General Warranty Obligations Confusion often arises when a contractor believes that the call back warranty is the extent of its responsibility to the owner. As noted above, the call back warranty is separate and apart from other, more general warranty obligations. Thus, a contractor is not simply responsible for items that require repair if it receives notice within the call back period. An owner may still be able to bring an action against a contractor and recover damages where the contractor refused to make repairs to items discovered after the call back period. The A201-1997 General Conditions makes it clear that the call back warranty is a period of time that the contractor is required to return and make repairs, and is in addition to the general warranty obligation. Compare Article 3.5 and 12.2.2.1. Implied Warranties and the Statute of Repose In addition to express contractual warranties, Arizona courts also recognize implied warranties in construction contracts. Those include the implied warranty of good workmanship. An owner’s claim for breach of an implied warranty does not begin to run until the owner discovered or should have discovered the defect. As a result, in the case of a latent or undiscoverable defect, the contractor will be on the hook long after the project is completed. Arizona’s statute of repose effectively extends a contractor’s warranty obligations for eight, and potentially nine, years from substantial completion of construction as defined in the statute. If an owner discovers defects in construction years after completion, that owner may bring an action in order to recover its damages. Conclusion Contractors are subject to different types of warranties and different time frames that they may have to honor such warranties. An understanding of the differences and the applicable periods of time is critical when responding to demands from owners making “warranty” claims. ABOUT THE AUTHOR MICHAEL LUDWIG Mr. Ludwig concentrates his practice on construction law, personal injury defense and professional liability defense. He co-authored the Arizona Construction Practice Manual published by the Arizona State Bar and is a member of the Executive Council for the State Bar’s Construction Section. He has been selected as a member of Arizona’s Finest Lawyers and Southwest Super Lawyers for construction litigation. Contact Mike at 602.263.7342 or mludwig@jshfirm.com.