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There are several different types of Warranties and they don’t necessarily provide blanket
coverage. Not all Warranties are the same but if you do your homework, warranties can be an
extremely useful planning tool for your Homeowner Association. Careful and strategic planning
of installed systems or products whether new and/or used can allow you to actualize the life
expectancy of the product or system permitting the warranty coverage to remain intact. All
Warranties have specific criteria, duration and responsible parties. Once you understand how
warranties work, we can then demonstrate their effectiveness in long term planning. The following are some examples of the most common warranty coverage.
1. Product warranty
2. Manufacturer’s warranty
3. Purchased extended warranty
4. Labor warranty
First is the product warranty, you receive a part or product that either arrives or once opened is faulty or broken and the supplier replaces it immediately at no cost. Typically there is indisputable evidence of damage or failure and that it never performed for its intended use. The damage, defect or product failure is usually obvious and visible.
1. Example: You purchase a lamp and upon delivery or opening the box, the stand is cracked and broken in half.
2. A product failure can also be determined to be faulty even if it not easily visible but can be
demonstrated. Example: You order a window that visibly looks intact and functional, but very quickly demonstrates a failure. When water is applied it leaks at the seal, glazing, frame etc.
a. This type of product failure may or may not have a time frame requirement.
b. They type of product failure must demonstrate it was not an installation issue.
Next is the manufacturer’s warranty, this is the continued version of the product warranty, but involves a very specific set of requirements to satisfy the warranty. These are referred to as
“Manufacturer’s Specifications.” This is more typical of installed “systems” but can also include
individual products as well. Also, be aware that Manufacturer’s warranties go back to the date
they ship, not when your installation begins.
1. Example: A roof product may require “certified annual inspections and maintenance” to ensure that there are no external causes for problems not related to the product. This is Proof of ongoing maintenance using correct support products such as sealants etc. These requirements
are obligatory to satisfy the manufacturer warranty.
2. Original Owner Only Warranty: This is often a condition made by the manufacturer where the warranty only exists for the original purchaser. An example would be a homeowner that purchases “lifetime guaranteed” windows, but it is only valid for the original homeowner. If the house is sold, the warranty ends there.
Next is the extended warranty. This is where the manufacturer may additionally offer “Add
On” options; these usually are offered for an additional fee. They are also frequently marketed
as a periodic maintenance upgrade.
1. Example: When purchasing a new washing machine, you are offered an extended warranty for at additional cost.
2. Example: When referencing building systems, it is usually the maintenance “Add-On” to an installed system. A deck coating system offers a 5 year warranty which includes all of the
standard Manufacturers’ specification requirements. But if you buy the extended 10 year
warranty then at 5 years, a “Re-coat” is applied. The Re-coat is cheaper than a complete new
deck coating system. Thus, you get an additional 5 years for half the cost.
Lastly, is a Labor or installation warranty where the “Contractor or Service Provider” gives a guaranteed time frame any fault related to their installation. The terms of this type
warranty are included within their original contract for service. It typically includes a time frame, and any specific limited liability related to the product.
1. Example: You contract with a service provider to replace a window. Once installed, when water is applied to the window it leaks. The Contractor must now determine why the window is leaking. Is it the product itself that’s faulty (see above), or if they installed it incorrectly. If the Contractor determines they installed it incorrectly, they simply repair the installation at no cost to the consumer. If the Contractor determines it is the product, then they must determine if it is still inside the warranty period and contact the supplier or manufacturer for warranty activation.
So now understanding the various types of warranties, how does this relate to a dynamic cost
savings to an HOA? Currently, HOA’s typically use either their Reserve Studies or a more proactive association also has an on-going preventative maintenance plan. But here is how you
can strategically use both by ensuring your Reserve Study considers the cost savings of a
1. Example: Your board is planning for an upcoming deck coating project according to your
reserve study. The proposed deck coating system is offering a 5 year warranty with an
additional option to add on 5 years at a reduced cost for a maintenance coat to be applied
at five years. You can create a cost savings for the HOA which will vary depending on the
number of decks in your Association. Here is a strategic savings example:
a. The original cost of the deck coating $2,500.00 per deck
b. The add-on maintenance coat at year 5 $ 800.00 per deck
c. Regular inspections and possible repair & maintenance $ 400.00 per deck
Total Project includes 10 year warranty $3,700.00 per deck
Or A traditional Deck “don’t fix it until it’s broken” program.
a. The original cost of the deck coating $2,500.00 per deck
b. At 5 years apply another new system $2,500.00 per deck
Total Project includes 10 year warranty $5000.00 per deck
So the HOA would have a savings of $1,300.00 for the same warranty period. By putting the regular inspections and repair and maintenance and employ.
Whenever a new system is installed the HOA renews their reserve study.
Question: What if the failure is identified after the “Labor Warranty” expires? The
Contractor can “choose” to honor the Labor/installation warranty, or decline it. It usually
depends on individual circumstances surrounding the failure.
Question: How can you trust that the Contractor is telling me the truth about the
problem? Well, the manufacturer will decline warranty responsibility if the Contractor
cannot demonstrate it’s the manufacturer’s responsibility. They may even challenge the
Contractor findings and notify the Homeowner that the Contractor is responsible.
Problems that can terminate warranties can be related to the viability of the company offering
the warranty. If the service provider goes out of business, then the warranty is voided with no
further recourse available to the client. In other words, “A warranty is only as good as the company behind it and if that company is gone, so is the warranty”. Other issues that can void
warranties are not meeting the manufacturer’s specification for maintenance and also watch for the equally deadly “We do not guarantee compatibility”. This gotcha on a component vendor’s
ad means you may not be able to return a product simply because it doesn’t match up with your existing system. Another red flag: “Only warranted in supported environments”. This may
mean they won’t honor a warranty on a system that is not specifically supported or made by their company, or it may mean they’ll insist on installing the product themselves.
Another dangerous phrase is “We reserve the right to substitute equivalent items”. This means that instead of getting the same high-quality name-brand products you originally requested; you may end up with generic products which theoretically equivalent according to the spec sheets, but perhaps more likely to fail the day after the warranty expires. Substitution can be interpreted as “bait and switch”, so most vendors are scared of getting called on this. Very few will hold their position if you press the matter.
So how can you protect yourself from scam warranties? Here are the conditions I try to meet
and questions I want answered when reading a warranty:
1. Read the fine print!
2. Who is backing the warranty?
3. What does the warranty cover?
4. How long does the coverage last?
5. Is the company backing the warranty financially stable?
6. Should I get an extended warranty? A warranty is not an extended warranty. – If the
product performs as advertised, it won’t need an extended warranty.
7. One absolute show-stopper is the phrase “All sales are final”. This means you have no
options if a part doesn’t work. Avoid any company with this policy.
8. Only buy from reputable suppliers. Avoid the Flea market mentality.
So take the extra time to review the fine print and know what is offered as warranty coverage.
While they may truly be offering a lifetime guarantee, it may not include all the components or is
limited and restrictive. Decide what is important to you when purchasing a product or service
and consider your financial resources and what’s your expectation from it. All of these will
steps and considerations will steer you to the best decision for you.
To Read this article and more published in the CAMEO Winter 2015 Newsletter, Click Here ~> Cameo Newsletter