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There is a growing trend across the industry
towards relying on warranty coverage for various aspects of construction.
Nearly everyone is familiar with the New Home Warranty coverage for
residential buildings, with either five or ten year structural defect
coverage. Only qualified contractors can offer this protection, which
is backed by the New Home Warranty of B.C. The marketplace has come
to expect this kind of coverage on their new housing.
Another familiar warranty program is offered
by the Roofing Contractors Association of B.C. This organization provides
either two or five year coverage on commercial roofing systems applied
to their specifications and installed by their trained contractors.
Even though RCABC has a relatively small number of accepted contractors
on their roster, most construction specifications call for their program.
It is fair to say that these two industry-run,
third party warranty programs have done a very credible job of improving
the quality of work, and are expected by the end user. This is enhanced
by the fact that they have actually effected major repairs under warranty
on projects that have failed for one reason or another.
Contrast this with the recent proliferation
of manufacturers warranty programs. A number of the cladding manufacturers
are offering extensive warranties on their proprietary systems. They
may also bind the system applicator or contractor for five years or
more for workmanship, labour and repair costs. And while this has provided
some level of comfort to municipal authorities and building owners,
it is creating some serious problems for the cladding contractors.
Designers and specifiers have jumped on
these warranties in order to find some measure of assurance and relief,
and are able to transfer liability should a failure occur. The City
of Vancouver has forced the hand of all EIFS manufacturers by demanding
"an acceptable" full 10 year labour, material and repair warranty
on the contractors or a conditionally extendible 5 plus 5 maintenance
dependent warranty. This situation is being driven by political pressure
to "do something" in response to the high level of recent
building failures.
EIFS manufacturers will soon have company
in Vancouver when the pending "other cladding systems" bulletin
comes into effect. (see other article) That bulletin calls for all cladding
systems, including stucco, vinyl, wood, but not brick, to be covered
by the same 10 year warranty provisions.
These warranties create a heightened expectation
of system performance, and full recourse for the building owners should
the specified system fail. The reality is if the system is installed
by trained and qualified contractors there should be no expectation
for failure of the cladding system. In addition, there is growing evidence
that a majority of the building failures in the Lower Mainland of B.C.
are a result of overall poor workmanship, over-expectation of design,
lack of inspection and gaps in trade responsibilities, not as a direct
result of the finished cladding application.
The warranties also give the owners an
expectation that they will have recourse against the contractors and
manufacturers well into the future should a problem develop. The reality
is that the burden of proof lies with the owners to prove fault, and
they usually have to go through legal channels to actually get satisfaction.
Manufacturers' limited system warranties
which require the cladding contractor to be party to the warranty create
a real dilemma for the contractor. It should be noted that New Home
Warranty requires a one year warranty from the contractor, and the RCABC
requires two years. After that period the warranty program carries full
responsibility.
For a cladding contractor to bid on a publicly
funded project, the company must carry bonding for that project. The
contractor secures the necessary bonding from the insurance marketplace.
The insurance company issues a bond only after it has carefully calculated
the risks involved with that particular company. The most a contracting
company can expect from the insurance market is a two year bond.
If that insurance company then discovers
their contractor has a long term exposure on another project, there
is every chance the contractor may have current bonding pulled or be
unable to secure bonding for future work. Mr. Brian Logan, current Chair
of the Surety Association of Canada recently confirmed this in conversation
by stating that "contractors may not be able to secure bonding
if they have signed their company to long term labour and workmanship
portions of a limited liability manufacturers warranty.
Much of the problem stems from a basic
misunderstanding of the purpose for a warranty. It is not a sales tool.
And it is not a solution for building failures. The intent is to limit
the ongoing exposure of the contractor or manufacturer. Without an express
warranty in place, an implied warranty may last for many years. Limited
warranties are used to impose certain standards on builders, sub-contractors
and manufacturers, to define a time limit on their exposure to risk,
and spell out clearly what will and will not be covered.
Many wall and ceiling contractors are frustrated
with the imposition of long term warranties on the industry. The frustration
comes from the fact that they either bid the work and risk losing their
bonding, or let the work go to another contractor who may not know the
risks until it's too late. Others are questioning whether a building
department can force warranties on the industry through building bylaws.
The message from the contractors is clear.
Manufacturers should stop the one-upmanship, and get back to basic material
warranties. Contractors should stay with warranties commonly found in
standard construction contract documents. Municipalities should stay
out of the warranty business, and focus on ensuring compliance to building
codes. And if there are concerns about system performance, then more
attention must be paid to who can purchase and install cladding systems.
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