7 Steps to Minimize Warranty Woes

Filed in Business Management, Legal by on December 10, 2015 0 Comments

dollar on hookWarranty services are a great way to give customers peace of mind and protect them against poor-quality construction. But what are builders to do to protect themselves from excessive liability?

Even the most skilled and well-intentioned builders can see things turn ugly with a home owner if something goes wrong on a new project or repair request. But builders can take certain steps to help them avoid these types of sticky situations.

Put it in writing.

Every state has statutes and code requirements regarding warranties. However, these requirements are often open to the courts’ interpretation. To minimize variation, create your own written warranty with specific language and guidelines. A clearly defined warranty allows you to control warranty costs, limit liability exposure and outline the process for dealing with warranty service issues

Have an attorney review your warranty language.

Your warranty document is a contractual agreement between you and the home owner. Even if the document was provided by a third-party warranty company and has been time- and court-tested, it’s still a good idea to have your own attorney look it over.

Establish a formal process for service request submissions. 

Accepting verbal-only requests for warranty services can lead to miscommunication and tracking issues. But by requiring the home owner to submit a simple, service request form – whether it be a hard copy, online form or even through email – you can avoid such problems. The record should include general details of the request, as well as the date and time it was received.

After the request is received, generate a work order to be delivered to the appropriate internal warranty tech or subcontractor, and follow up with the home owner as soon as possible regarding the request.

Obtain the home owner’s signature once the work is completed.

The technician should always obtain a signature certifying that the job is done and that they are satisfied. If the customer is not satisfied with the work, that should be documented as well, along with explicit details for follow-up review.

Resolve disputes through a third party.

You can’t please everyone. And the last thing you want to do is engage in a lengthy and expensive lawsuit. Establish a process for settling disputes that all parties understand. The process should involve an impartial third party to resolve the dispute through mediation or arbitration (in states that allow such dispute-resolution procedures). Many third-party warranty companies offer mediation and binding arbitration services prior to litigation.

Know your state laws.

Warranty terms may vary by state. In Florida, for example, a one-year warranty is defined as 13 months, which gives the home owner a one-month grace period to make a claim on a warranty issue that occurs on the 365th day of ownership.

Rely on the experts.

Your customers may appreciate you, but they also know you have a vested interest. To remain impartial and above the fray, refer their questions on material or system performance to the Residential Construction Performance Guidelines, or have a manufacturer’s representative examine the problem and talk to your customer.

Taking the time now to define liability limits and establish warranty processes will save you and your business significant time and valuable resources in the future.

Go to nahb.org for more information on how to safeguard yourself and properly address various liability and other legal issues.

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