Tag Archives: architect

Implied Warranties on Construction Projects

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warrantyA contractor client asked me to explain to him what it meant when someone told him that he had given implied warranties to an owner.  This is an excellent question.

Implied warranties are warranties that the law presumes you have given to the other party.  Even if you never make any written warranty or guaranty, North Carolina courts will often find that you are still liable for certain warranties unless  you explicitly disclaim them.

The warranties that are generally implied in construction contracts include:

 

  • Warranty of Merchantability

 

  • Warranty of Fitness for a Particular Purpose

 

  • Warranty of Habitability (residential construction only)

 

  • Warranty of Plans and Specifications

 

  • Warranty of Workmanship

 

  • Warranty to not delay or hinder any other parties on the Project

 

 

What do these warranties mean?  Essentially, they all mean the same thing:  that your product or labor is at least acceptable.  It may not be perfect—but it meets certain minimum expectations.

Disclaimable Warranties

Warranty of Merchantability—Under the Uniform Commercial Code, this warranty states that the merchant or supplier of a  product delivered to the buyer warrant that the product is able to be used as intended.

Warranty of Fitness for a Particular Purpose—This warranty, also under the Uniform Commercial Code, states that a product will be able to be used for a specific purpose which the buyer has told you about.  It is usually less of an issue that merchantability—however, if a buyer tells you of an unusual need that he is expects the product you supply to him will meet, it can come into play.

Both of these warranties can be disclaimed—that is, you can assert that you are making no such warranties in your written contract or purchase order form.  Certain requirements apply to make a disclaimer valid, so check with legal counsel.

Nondisclaimable Warranties

The remaining warranties—Habitability, Plans and Specifications, Workmanship, and Not to Hinder or Delay—are warranties that, in general, cannot be disclaimed.

Warranty of Habitability– The contractor for new residential construction owes a duty to build a house (and related fixtures) such that it can be lived in for normal residential purposes.  This duty extends to both the original purchaser and subsequent purchasers, so long as statute of limitation and repose are met.

Warranty of Plans and Specifications–The owner impliedly warrants to the contractor that the plans and specifications provided to the contractor are adequate.  This is also called the “Spearin doctrine.”

Warranty of Workmanship—Every contractor impliedly warrants that his construction will be built in a workmanlike manner and sufficiently free of major defects.  This implied warranty is sometimes made express in written contracts—such as in AIA A201 3.5.1.

Warranty to Not Delay or Hinder—This warranty is owed by each contractor to his subcontractors, prime contractors to one another, and the owner to the contractor.

If a warranty is breached, the other party has a claim for breach of the implied warranty at issue.

  Question Mark Have a question about implied warranties?  Shoot me an email at mbrumback @rl-law dot com.

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Photo “Warranted/Day 70” by Aaron Goselin via Flikr made available via an Attribution-Noncommercial-Share Alike 3.0 License.

Tuesday Tidbit: Modernist Home Tour this weekend

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Interested in modernist homes and live in the Triangle? If so, you might want to check out the Triangle Modernist Houses Thompson House tour this coming Saturday, June 19th.

From the Triangle Modernist website:

One of the Triangle’s most remarkable houses!  Built in 2001 and commissioned in 1999, the Bobby and Diane Thompson Residence was designed by David Davenport.  It was built by the Splinter Group and Tom Brown with Bobby Thompson actively managing much of the construction.  A 6000-square-foot, two-story home engineered of heavy steel and wood construction covered in real stucco.  Includes a go-kart track modeled on Bristol International Speedway and a 3400 sf garage/apartment.   Interior design by Lynda Lankford.  Lighting by Stan Pomeranz of Lighttech Design.

The Thompson house is part of a ten house tour by the Triangle Modernist Houses, which aims to showcase the metro-Raleigh area, which has the third largest collection of modernist houses in the country.

LEED Credibility Challenged– UPDATE

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 A group of local citizens, designers, and school board Building Committee members in Eagle Ridge, Wisconsin has issued a statement expressing their belief that LEED certifications are now suspect, following the failure of the USGBC to withdraw LEED Certification from the Northland Pines High School.  The group had appealed a decision to dismiss their claims that the LEED Gold certification for the school should be revoked, despite clear evidence which, they claim, shows that the building did not meet specific ASHRAE Standards, which are prerequisites to getting a LEED (green) building certification.

 They call into question the value of LEED certification if there is no verification of a purported building’s “green” credentials.

 You can download their statement of concern “USGBC and LEED Credibility Destroyed”.

 For more information relating to the case, Stephen Del Percio’s article “Wild Week for Green Real Estate Law” is an excellent summary.

 As previously mentioned on this blog, there is no clear idea of how the Courts would treat any LEED-specific claims.  Yet.  Stay tuned.

 UPDATE:  This afternoon, the USGBC has issued a statement standing by their findings:

LEED’s intent, and USGBC’s mission, is about helping people learn about and understand how to design, build and operate better buildings.  Buildings are complex systems of systems and any of the 100,000 of decisions associated with design, construction and operation can always be second-guessed. We are confident that our due diligence has been more than sufficient to put these issues to rest, and we are moving forward to focus our efforts where they do the most good — advancing the market uptake of green buildings and communities that is at the heart of our work

The full statement and commentary can be reviewed at Chris Cheatam’s article “Breaking: USGBC Stands by Its LEED Challenge Decision.”

Model Green Hotel—Putting the “Green” in Greensboro

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This Sunday’s N&O featured a piece on the Proximity Hotel in Greensboro, NC.  Developer Dennis Quaintance is the man behind the hotel, which is the first hotel in the country to obtain a Platinum LEED rating.  According to its website,  the Hotel was built to use 40% less energy and 30% less water than a comparable hotel.  Innovations include  a unique elevator design which captures and reutilizes the system’s energy expenditure as well as 100 rooftop solar panels to generate hot water.

In stark contrast to the recent Town of Cary decision  to forego LEED certification for its new fire department building, the Proximity Hotel has spent approximately 3% extra to obtain its certification.  Developer Quaintance expects to make the money back, through a combination of energy efficiency and state and federal tax credits, as early as 2012.

If more developers calculate that they can make more money through the LEED program, expect to see more LEED certified buildings in the future.  For now, however, two years after the Proximity Hotel first opened, there is only one other platinum hotel in the U.S.

 

Statutory liability of Architects and Engineers to Contractors on State Construction projects (Law note)

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As noted in my last post, the state multi-prime bidding statute provides for liability between separate contractors on state projects.

 A specific case from the Middle District Court of North Carolina (federal court), interpreting state law, further extended this liability to architects and engineers on state multi-prime projects.  RPR & Associates v. O’Brien/Atkins Associates, P.A., 24 F. Supp. 2d 515 (M.D.N.C. 1998).

 In that case, which involved the George Watts Hill Alumni Center at UNC-Chapel Hill, the court held that an architect and consulting engineer could be held accountable to contractors who rely on their work on North Carolina construction projects based on the same statute as that imposing liability on multi-prime contractors on one another.

 The issue in the RPR case was whether the statute applied to architects and engineers, since they are not “prime contractors” under the North Carolina multi-prime contracting statute.  The RPR court held that for purposes of the statute, design professionals were “separate prime contractors” such that they could be sued directly by prime contractors on state jobs.

 While this case is now over a decade old, it still surprises many design professionals who incorrectly assume that since they are not one of the enumerated prime contractors that they are not subject to statutory liability to the prime contractors.

In my next and final (for the time being) post on this subject, I will address the application of the statute on subcontractors.