Anyone considering the purchase or construction of a new residence or an addition or renovation of an existing residence should be interested in the warranties that may apply to the new home or construction.
In Virginia, certain warranties are implied by law while others only apply if expressly set forth by contract.
Implied Warranties
Virginia follows the common law of England except as altered by acts of the Virginia General Assembly. In accordance with the common law, Virginia recognizes an implied warranty in every contract for construction that the work “shall be done in a workmanlike manner” and according to “good usage and accepted practices in the community in which the work is done.” [See, Mann v. Clowser, 190 Va. 887 (1950).] A contractor breaches this implied warranty by furnishing defective materials or workmanship.
However, the common law applied the rule of caveat emptor (“buyer beware”) which does not recognize any implied warranty of fitness in a purchase of real property as opposed to construction services. Accordingly, until 1979 a contract for the purchase of property in Virginia in which the seller/builder agreed to construct a new residence did not include any warranty on the residence not expressly set forth in the contract and deed. In 1979 the Virginia General Assembly altered this common law rule by enacting statutory warranties that are implied in the sale of a “new dwelling” by a developer/builder that the dwelling and all fixtures are (1) free from structural defects, (2) constructed in a workmanlike manner, and (3) fit for habitation. [See, Va. Code Annot. § 55-70.1.] However, the seller is permitted to waive, modify or exclude these statutory warranties and sell a new home “as is” by conspicuous language in the contract. If not waived, etc., the statutory warranties extend for one year from the date of transfer of title or the buyer’s taking possession, whichever occurs first, except the warranty against structural defects in the foundation which extends for five years from such date.
The statutory warranties only apply to a “new dwelling” or a dwelling that has not been occupied for a period of more than 60 days by anyone other than the seller or the buyer or has not been occupied by the original seller or subsequent seller for a cumulative period of more than 12 months. Also, the term “structural defects” is limited to defects that reduce the stability or safety of the structure below accepted standards or that restrict normal use.
Express Warranties
An owner considering the construction of a new home, or an addition or substantial renovations to an existing home, should require certain express warranties in their contract for construction. A reputable contractor should agree to include, for example, express warranties such as those in the AIA Document A201 General Conditions (2007) that (1) all materials and equipment furnished will be of good quality and new unless the contract requires or permits otherwise; (2) all work will conform to the requirements of the contract, plans and specifications; and (3) the work will be free from defects. Most contractors typically agree to an additional “call-back” warranty or “guarantee” that any work found to be defective within one year after substantial completion (excluding defects caused by alterations or improper operation or maintenance by the owner) will be corrected promptly after written notice from the owner. Standard construction contracts also include provisions for special warranties, like those issued by manufacturers on roof materials, major appliances, etc., to be transferred by the contractor to the owner.
Warranties on construction implied by law or expressly set forth by contract are important forms of protection for owners against defective workmanship or materials on construction projects. Anyone contemplating the purchase of a “new dwelling” should resist the seller’s attempts to waive, modify or exclude the protections afforded by the statutory warranties. Anyone contracting for construction of an addition or renovation of an existing home should require express warranties of workmanship and materials and provisions for transfer of special warranties in the construction contract. A seller or contractor who insists on waiver or exclusion of implied statutory warranties or is unwilling to provide reasonable express warranties should not be considered.