Warranty Claims: A Self-Storage Manager's Guide to Handling Construction-Related Problems
Copyright 2014 by Virgo Publishing.
By:
Posted on: 12/13/2010



 

By Jon Orlando

Whether you’re the manager of a new facility or one that’s recently been expanded or remodeled, you’ll likely have some construction-warranty issues. Once you’ve discovered a problem, you may wonder:

  • Is this covered under the warranty?
  • Who do I call?
  • How long do they have to respond?
  • Who pays for the damage to the tenants’ goods?

These are all good questions. Let’s take a closer look at what’s involved in warranty claims, your role in handling them, and how you can head off problems.

Review Documentation

The most important part of the warranty process is documentation. Once your project is complete, the contractor should issue a one-year warranty that covers the project in general, and subcontractor/vendor warranties covering the individual trades. Keep in mind that warranties for the latter can be longer than one year, especially for things such as air-conditioning systems and roofs, so make sure you review these warranties carefully.

There’s no need to be bashful about requesting the warranties, either. Most contractors expect to provide these documents before receiving final payment. If you didn’t receive a written document specifically warranting the work after your project was completed, don’t worry. Most courts uphold the one-year warranty as implicit to the industry, so you’re still legally covered.

Although most warranty language is pretty standard in the construction industry, review your documents and make sure everything looks in order. The most important information on the documentation is the dates. Check the warranty “to and from” dates and make sure they’re accurate. The start date of the warranty should be at the time of completion and can be related to a Certificate of Occupancy or Notice of Acceptance issued by the building department.

Once you’re satisfied with the dates, do yourself a favor and mark the end date on a calendar at least a month before the warranty period expires. At that time you can review the entire project for any outstanding issues and provide notice to the contractor for any necessary repairs.

Examine Coverage

Just as with a new car, certain items are covered under a contractor’s warranty and other items are considered wear and tear. In addition, failure to provide maintenance can void or reduce your ability to recover damages under the warranty.

Once a new self-storage facility, remodel or expansion is complete, the contractor will provide a full one-year warranty for the project. This covers basically everything installed on your project, however, it doesn’t cover damage to the facility caused by tenants. In addition, make sure your facility is maintained. Roof leaks caused by debris on roofs or clogged gutters don’t constitute a warranty claim, nor does improperly functioning air conditioning due to unchanged filters.

Provide Notice

Always notify the prime contractor when there’s a warranty issue with the facility. The contractor understands the complexity of the project and, based on the warranty claim, can notify the proper subcontractors and vendors as necessary. In addition, the contractor has the legal leverage to “force” the subcontractor to respond if necessary. You’ll find most contractors will reply to your claim promptly, as they value their reputation and want to continue the relationship in the hope of getting more work.

Some contractors will request that you contact the subcontractor or vendor directly to handle the warranty claim, but don’t do this. If you do, you may find yourself in arguments and issues that happened during the project and are not necessarily of your concern. Your contract agreement for the project was with the prime contractor, and it is the company legally responsible for resolving the warranty claim in the first year.  

Depending on the urgency of the claim, you may choose to notify the contractor in several ways. The most efficient process is to place a phone call regarding the issue and follow up with an e-mail. The phone call ensures quick notification, but the e-mail is important, as it establishes the date and provides a written description of the problem.

Although it’s not your responsibility to dissect the warranty issue, the more information you give the contractor the better. Make sure you provide a location (Building A, B, C, etc.) and a unit number. Pictures are always helpful and can assist the contractor in communicating with the subcontractors and vendors, accelerating the response time to your claim.

Scheduling Work and Follow-Up

How long does the contractor have to respond? Response time generally relates to the nature of the claim. It’s important to be reasonable with your expectations based on the urgency of your problem. Issues like leaks and broken air conditioning can cause damage to customer goods and should be addressed quickly. On the other hand, a small area of pealing paint or a broken floor tile doesn’t warrant a next-day response.

However, it’s reasonable to expect the contractor to respond to your request within one week. This timeframe gives the contractor time to analyze the claim and decide which of the subcontractors is responsible for the warranty work. If you don’t get response or acknowledgement of your claim, follow up. Make sure the follow-up is documented in case you have to do the work yourself and are forced to take legal action.

Paying for Damage

Who pays for damage to tenants’ goods? This is perhaps the most complicated question. The fact is most contractors will be willing to pay for damaged goods, but many self-storage lease agreements explicitly state the facility isn’t responsible for damage. It may be difficult to legally force the contractor to pay if the operator isn’t obligated to do so.

In addition, it’s important you mitigate any continuing damages. For example, if there’s a leak in a unit that has slightly damaged a piece of furniture, you’re under some obligation to relocate the tenant’s goods so the damage doesn’t continue. If a legal situation arises, the courts will probably award you the cost for relocation of the goods, but may not award further damage to items that could have been avoided.

The best thing to do is be upfront with the contractor for any expenses beyond the repair. If the contractor refuses to pay, you may be in a legal quandary and will need to seek counsel to review the terms and conditions of the contract and insurance requirements for the project.

Warranty claims can be a difficult and aggravating process. Just remember to provide as much information as possible on your initial claim, be realistic about the contractor’s timeframe to respond, and follow up accordingly.

Jon F. Orlando is the vice president of construction for Oden Hardy Construction Inc. in Bradenton, Fla. The design-build firm specializes in the self-storage industry throughout the Southeast. For more information call 941.792.2233; e-mail jon@odenhardy.com ; visit www.odenhardy.com .