Construction Defect & Warranty Policy
This Policy describes the construction warranty framework BDDI applies on managed projects, the standard warranty periods, the right-to-repair process, and the limitations applicable in every state in which we operate.
Purpose
This Construction Defect and Warranty Policy (the “Warranty Policy”) describes the warranty framework Blue Diamond Development Inc. (“BDDI”) applies on projects under our management. The actual warranty governing a specific Project is set out in the construction contract for that Project. In the event of a conflict, the construction contract controls.
Definitions
- “Patent Defect” means a defect that is observable on reasonable inspection at the time of Substantial Completion.
- “Latent Defect” means a defect that is not reasonably observable at the time of Substantial Completion and that becomes apparent only later.
- “Substantial Completion” has the meaning given in the construction contract or, absent express definition, the date the Project is sufficiently complete that the Owner can occupy and use the Project for its intended purpose with only minor punch-list items remaining.
- “Warranty Period” means the period beginning at Substantial Completion during which the contractor is obligated to correct defective work, as set out in the construction contract.
Standard Warranty Periods
Unless modified by the specific construction contract, the following warranty periods apply:
| Component | Warranty Period from Substantial Completion |
|---|---|
| General workmanship and materials (call-back) | 1 year |
| Mechanical, electrical, and plumbing systems (mfr. pass-through) | 2 years or manufacturer warranty, whichever is longer |
| Roofing system (mfr. pass-through) | 10-30 years per manufacturer |
| Building envelope (water intrusion) | 5 years (where contract provides) |
| Major structural systems | 10 years (statutory or contractual) |
| Appliance and equipment manufacturer warranties | Pass-through to Owner |
Statutes of repose and statutes of limitations vary by state. Many states adopt a six-, eight-, ten-, or twelve-year statute of repose for latent construction defects. Owners should consult counsel for the specific limitation period applicable to their Project state.
Notice and Opportunity to Cure
Before commencing any defect claim, the Owner must provide written notice describing the alleged defect with reasonable particularity, including photographs and location. The contractor and BDDI must have a reasonable opportunity to inspect and to cure within a commercially reasonable period. Self-help repair without prior notice and opportunity to cure may forfeit the warranty obligation and shift cost responsibility to the Owner.
Right-to-Repair Statutes
Many states have enacted construction-defect right-to-repair statutes that require pre-suit notice, inspection, and an opportunity to cure before litigation, including but not limited to California Civil Code § 895 et seq. (SB 800), Florida Statutes Chapter 558, Nevada Revised Statutes Chapter 40, Arizona Revised Statutes § 12-1361 et seq., Texas Property Code Chapter 27 (RCLA), Washington RCW 64.50, and similar statutes in Colorado, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Virginia, West Virginia, and Wisconsin. Owners and BDDI will follow the applicable state statute.
Spearin Doctrine and Design Responsibility
Under United States v. Spearin, 248 U.S. 132 (1918), and analogous state authorities, an owner who provides plans and specifications impliedly warrants their adequacy. A contractor who builds in accordance with such plans and specifications is generally not liable for design defects, although the contractor remains responsible for defective workmanship and for advising the owner of obvious deficiencies the contractor should have observed during construction. Allocation of design liability among the design professional, contractor, and Owner is determined by the contract documents and by the applicable state’s adoption of the Spearin doctrine.
Excluded Items
Warranty does not extend to:
- Damage caused by the Owner, tenants, occupants, or visitors;
- Damage caused by ordinary wear and tear, abuse, neglect, or failure to perform routine maintenance;
- Acts of God, including without limitation flood, earthquake, fire, hurricane, tornado, severe weather, and any event for which Builder’s Risk or property insurance is the proper recourse;
- Modifications, alterations, or additions made by anyone other than the original contractor;
- Items expressly excluded by the construction contract or by applicable manufacturer warranty.
Mold, Moisture, and Indoor Air Quality
Mold and moisture intrusion claims are addressed under the building-envelope warranty. The Owner must promptly report any sign of moisture intrusion, condensation, or mold, and must operate the building’s mechanical systems (HVAC, ventilation, dehumidification) consistent with manufacturer recommendations and the operations and maintenance manual. Failure to do so may void the warranty.
Pass-Through and Subrogation
Manufacturer warranties on equipment, appliances, fixtures, finishes, roofing, and similar components are passed through to the Owner. BDDI and the Owner cooperate to perfect any subrogation rights against responsible third parties.
Insurance and Bond Recovery
Where a defect is covered by Builder’s Risk, CGL, professional liability, or another applicable policy, the Owner and BDDI will pursue insurance recovery in addition to or in lieu of warranty remedies. Performance bonds and payment bonds are addressed under the construction contract.
Disclaimer of Implied Warranties
To the fullest extent permitted by applicable law, all implied warranties of habitability, merchantability, fitness for a particular purpose, and workmanlike construction are disclaimed except as expressly set out in the construction contract or as required by non-waivable applicable law. In states where the implied warranty of habitability cannot be disclaimed (such as new-home sales in many jurisdictions), the warranty is limited to the maximum scope and duration permitted by law.
Limitation of Liability
The limitations of liability set out in our Terms of Service apply.
Dispute Resolution
Defect disputes follow the dispute-resolution process set out in our Terms of Service: informal negotiation, mediation, then binding arbitration under the AAA Construction Industry Arbitration Rules.
Updates
We may update this Warranty Policy. The version in effect on the date a construction contract is signed governs the Project covered by that contract.
Contact Us
Blue Diamond Development Inc.
Attention: Warranty Administrator
1501 South Greeley Highway, Suite C-3022, Cheyenne, WY 82007
Phone: (888) 851-1477
Email: derrick@bluediamonddevelopinc.com
Statutes of Repose by State
Statutes of repose set the outside limit for any construction-defect claim regardless of when the defect was discovered. Periods range from four (4) to twelve (12) years and are measured from substantial completion or another statutorily defined trigger event. Owners and counsel should confirm the precise period for the Project’s state. Examples include: Wyoming (10 years), Texas (10 years for residential), Florida (7 years from substantial completion or recordation of a notice of termination), California (10 years for latent, 4 years for patent), Colorado (6 years with possible extension to 8), Illinois (4-10 years depending on classification), New York (varies by claim type), and Massachusetts (6 years).
Right to Inspect and Test
On notice of a defect, BDDI, the contractor, design professional of record, surety, and insurance carriers (where applicable) have the right to enter the property to inspect, test, document, and photograph the alleged condition. Reasonable cooperation by the Owner is required, including access during business hours, removal of obstructions, temporary relocation of furniture or fixtures where necessary, and provision of relevant maintenance records. Failure to cooperate may forfeit the warranty.
Mediation and Arbitration of Defect Claims
Any defect claim that cannot be resolved through inspection and repair will be addressed under the dispute-resolution process in our Terms of Service: informal negotiation, then mediation, then binding arbitration administered by the AAA under its Construction Industry Arbitration Rules. Where a project state requires a different pre-suit process (such as the Texas Residential Construction Liability Act, the Florida pre-suit notice process under Chapter 558, or the California SB 800 procedure), that process is followed first.
Allocation Among Multiple Responsible Parties
Where multiple parties may bear responsibility for a defect (designer, contractor, subcontractor, manufacturer, prior owner, tenant), allocation is determined consistent with the contract documents, the Spearin doctrine, applicable state comparative-fault rules, and any applicable joint-and-several-liability statute. Where a state has adopted contribution and indemnity rules limiting joint-and-several liability, those rules govern allocation.
Implied Warranty of Habitability and Workmanlike Construction
In jurisdictions that recognize an implied warranty of habitability or workmanlike construction in connection with new home or new condominium sales, that warranty applies in addition to express warranties. Where the warranty can be lawfully limited in scope or duration, this Policy and the construction contract limit the warranty to the maximum extent permitted. Where the warranty cannot be lawfully limited or disclaimed (such as the New Jersey New Home Warranty Act, the Pennsylvania UCC implied warranties, the Florida Building Code implied warranty, and the Texas Residential Construction Liability Act), the warranty applies as required by law.
Pre-Existing Conditions and Owner-Provided Items
Warranty does not extend to pre-existing conditions of the property, to Owner-provided materials, equipment, fixtures, or finishes, or to design elements specified by Owner over the contractor’s or designer’s documented objection. Owner-provided items are subject only to the applicable manufacturer warranty, which is passed through to Owner.
Recall, Manufacturer Defect, and Class Settlements
If a building component is the subject of a manufacturer recall or a class settlement (for example, defective siding, defective windows, defective Chinese drywall, defective fire-resistant rated assemblies), recovery is sought through the manufacturer or the class settlement first. BDDI will reasonably assist Owner in pursuing those rights and in coordinating any related repair or replacement work.
Documentation and Record-Keeping
Owner is required to retain (a) all warranty registrations and pass-through documents, (b) the operations and maintenance manual delivered at Substantial Completion, (c) the as-built drawings and specifications, (d) maintenance records (HVAC service, roof inspections, plumbing service, fire-life-safety inspections, elevator inspections, etc.), and (e) any maintenance contractor reports. Failure to maintain these records may impair warranty enforcement.
Successor Owners
Express warranties run for the benefit of the original Owner and, where the construction contract permits, may be assigned to a successor Owner. Implied warranties may or may not run with the property, depending on the applicable state law (some states limit the implied warranty of habitability to the original purchaser; others extend it to successor purchasers within the warranty period). Owner is responsible for assigning warranties on transfer of the property and for notifying any new owner of the warranty terms and the contractor’s contact information.