Oregon Contractor Board June 08 update on consumer rights for new housing
The following information is here-in reprinted from the Oregon Contractors Board Newsletter, in the interests of public protection disclosure, and as a courtesy of AAA Home Drainage.
The information is from the CCB newsletter that explains important rights affecting the homeowner taking possession of new construction in Oregon.
In a past article I mentioned the new residential structures warranty law, and that it was my opinion that the law was being poorly drafted for purposes of clarity and for the protection of homeowners rights. While some additional clarity has been advanced since my first article, my opinion remains substantially the same.
Contractors that enter into a contract to build a new residential structure on or after July 1, 2008, must make a written offer of warranty to the owner or first purchaser, which covers defects in materials and workmanship for the structure (ORS 701.320).
This law does not apply to manufactured dwellings.
The following questions and answers explain a contractor’s obligation under the new law. You may wish to consult an attorney for advice on how this applies to your construction business, or to you as a prospective new home purchaser.
What is a “warranty?”
A warranty is an obligation by the seller that the seller’s product (here, a new home) is free from defective materials or workmanship performed, together with a promise to repair or replace the defective items and faulty work. A warranty is not a guarantee. Repair or replacement is satisfied by meeting building industry standards- there does not need to be complete customer satisfaction. A warranty does not cover items that arise from customer neglect.
What does a typical new home warranty cover?
A new home warranty typically covers: *Structural defects: Warrants against failure of structural components such as the load-bearing elements of the home. *Major home system failures: warrants against failure of plumbing, electrical, heating, and air-conditioning systems. Also warrants against failure of major appliances, such as refrigerators, dishwashers, ovens, and stovetops. *Workmanship: Promises to repair defects in work performed, such as installation.
All warranties are contracts. The terms of the contracts will vary. Some warranties, for example, cover only major home systems. Others provide limited coverage for all of the listed items. Still others exempt certain products or installations. Some warranties allow for the purchase of optional, additional coverage. Any warranty contract satisfies the new law.
Who must supply the warranty?
Although the contractor must offer a warranty, the contractor decides whether to supply the warranty directly, or through a company that sells warranties. A direct warranty is a contract between the contractor and the new owner or purchaser. A purchased warranty is a contract between a company that sells warranties and the owner or purchaser. Either warranty satisfies the new law.
What period of time must the warranty cover?
The law does not require a specific time for warranty protection. A typical new home warranty protects against structural defects for five to ten years and promises to repair or replace major systems for one to two years.
The contractor may select the time period the contractor feels is appropriate for the warranty.
How much can the contractor charge for the warranty?
The law does not set any limit on the amount that a contractor may charge for the warranty. Typically, new home warranties purchased for warranty companies run around $250.-$500. There may also be a service fee, like a deductible, which the homeowner pays when requesting service. A typical service fee is $50.
The owner may refuse the warranty and, as long as the two parties haven’t signed the contract to build the home, the contractor can withdraw the offer to construct the residential structure.
When must the contractor offer the warranty?
The contractor must, in writing, offer the warranty either before or at the time the contractor and owner (or purchaser) sign a contract for the construction of the new home.
What must the contractor do to prove the contractor offered the warranty?
The contractor must include statements in the contract that: *The contractor made a written offer of warranty, and *That the owner or purchaser accepted or rejected the offer.
Does this law apply to all contractors who build new homes, or only to those contractors endorsed as residential contractors on or after July 1, 2008?
The law applies to all contractors that enter into written contracts to build new homes on or after July 1, 2008, regardless of the type of license that they hold.