How Long is a General Contractor Liable?
If you’re a general contractor or a person hiring a general contractor, there’s always a nagging question in the back of your mind: “What happens if something goes wrong?”
In many states, there’s automatic legal protection for the public in the form of licensing, insurance, and contractor’s bonds, but many states don’t require contractors to be licensed or monitored by state authorities. And even in states that do require contractors to be licensed – what if the contractor just leaves town for a few years until the dust settles?
In this article, we’ll take a look at how long general contractors are liable for damages for poor workmanship, so gencons can plan for potential issues and consumers can plan their plan of action as well.
Statutes and Contracts
The cornerstone of a contractor’s liability lies in the realm of statutory laws and contractual agreements.
- Statutory Laws: State-specific statutes dictate the breadth and length of a contractor’s liability. For instance, in California, a general contractor is held liable for a minimum standard of construction for 10 years post-building completion, with certain defects claimable only within 1 or 4 years.
- Contractual Agreements: Contractual agreements are the secondary vehicle for liability determination. The primary contractual lever is called a ‘call-back warranty’ clause, which outlines the duration within which a property owner can legally compel the general contractor to amend any “construction defects”. Typically, this period spans one year, albeit contract-specific variations exist.
The first thing we have to do is define what it is we’re talking about when we say a general contractor is “liable”. Specifically, we’re talking about what sort of legal and financial responsibility a general contractor has to the person or group who hired the GC to oversee their project.
When we speak about liability, we’re speaking about liability for defects – issues with the construction job where the final product is not equal to what was agreed upon by both the client and the general contractor who is doing the work.
Finally, when we talk about liability, we have to use strict definitions of the elements at play. Usually, general contractors are liable to fix or give equal compensation for, any construction defect in their work. But what is a construction defect, exactly? There are basically two types of construction defects: design defects and construction defects.
Design defects, as you might imagine, occur during the design phase of a commercial or residential building, while construction defects occur during the actual construction phase of the project. The types of defects that can occur are numerous – anything from structural issues due to poor engineering to damages caused by using inferior materials. If the job did not meet the agreement between the client and the construction team, that will likely qualify as a defect!
Of these two types of defects, GCs are typically only liable for construction defects, although, in smaller jobs, the general contractor may also be heavily involved in the design phase as well, so they may also be liable in those situations as well.
Typically, the building engineer or architect is responsible for design-phase defects. On the other hand, the builder, usually the contractor or subcontractor, is held responsible for defects that occur if they don’t follow the design specifications provided by the building engineer and architect.
Contractual Warranties Of Contractor Liability
Contractor liability in the US is a Gordian knot of federal, state, and local jurisdictions, laws, and paperwork, so it’s in your best interest to research and understand your state’s laws around construction defects.
However, generally speaking, every state has some sort of legal process that determines the specific laws around contractor liability for construction defects. This includes how long a contractor is liable – known legally as the statute of limitations.
There’s no one-size-fits-all definition for when, where, and how a general contractor is liable for defects from a public level, but on a private level, through the wonderful power of contracts, homeowners or business entities can work together with general contractors to establish liability stipulations.
Through warranties, general contractors and specialty contractors can outline their liability – including how long a contractor is liable for defects.
In addition to contractual liabilities, there are also pieces of law that are not written down, but implied by the very nature of construction work. These are called implied warranties.
Implied warranties are exactly that – implied guarantees of work.
When doing construction, implied warranties are assumed. By taking on a construction job as a GenCon, no matter where you are in the US, you are silently agreeing to these legal tenets. There are two primary implied warranties in home construction:
- Implied Warranty of Good Workmanship: This assures that the home will be constructed in a competent and skillful manner.
- Implied Warranty of Habitability: This guarantees that the constructed home will be safe and livable.
While every contractor in the US is beholden to these implied warranties, it’s important to note that they are bound by statutes of limitation and repose, which dictate the timeframe within which a homeowner can initiate a lawsuit against a contractor. These statutes of limitation and repose vary from state to state and locality to locality.
Statutes of Limitation and Repose
Statutes of limitation and repose are the legal rules that dictate exactly how long homeowners have to seek redress for a general contractor’s construction defects. These statutes of limitation and repose are the sole delineators for dictating how long a general contractor is liable for.
These statutes vary significantly from state to state. For instance, in California, the statute of repose is 4 years for most defects but extends to 10 years for latent defects. In Georgia, the statute of repose spans eight years for all claims related to the design or construction of a building.
As a GC, it’s pivotal you understand and familiarize yourself with the local and state statutes of limitations that govern post-construction liability.
Common Construction Warranties
Contractors often provide their own express warranties, which usually supersede implied warranties, and are written into a contract agreed upon by both parties.
These express warranties can be negotiated by the client and contractor and may vary in terms of duration and coverage. Homeowners should check these warranties carefully and make sure they understand the terms fully. A legal advisor is suggested in this step.
The Most Common Construction Warranty: The One-Year Warranty
Probably the most prevalent warranty you’ll see among general contractors is a one-year warranty, which essentially allows homeowners to call back the general contractor to rectify work within one year. Usually, this dovetails with one-year state statutes.
However, this practice may sometimes limit the homeowner’s right to implied warranties and potentially restrict the timeframe to discover a defect and file a lawsuit. As always, make sure a lawyer looks at every contract you sign with a contractor. Your ignorance of what’s in the contract that you willingly signed is not an excuse in any court of law.
A callback warranty is a type of warranty that kicks into action after the substantial completion of a project. There’s not a one-year warranty boilerplate into a construction contract, this is typically what you’ll see instead. Like the one-year, a callback is simply the legal codification of when a contractor can be called upon to rectify any nonconforming work.
The typical duration of this callback period is usually a year, although this can be adjusted based on the contract’s language. Just like the one-year, this warranty essentially allows the owner to compel the general contractor to correct any work that wasn’t performed up to the stipulated standards initially. However, the owner is required to notify the contractor and allow them to repair the defective work on their own accord.
Statutes of Limitations For General Contractors By State
So, how long is a general contractor actually liable? Well, despite contractual warranties that stipulate a short timeline, it ultimately depends on the statute of limitations in your state. This way, States ensure that homeowners or businesses can seek redress for construction defects for a length of time that’s more favorable than what the contractors dictate in their contracts.
As we’ve discussed throughout this article, exactly how long a contractor is liable really depends on the local and regional laws that exist in your area. Here’s the statute of limitations that dictates how long a general contractor is held liable – for the largest 25 states in the US. If you don’t see your state here, it’s easily searchable online!
- California: 4 years (contracts), 2-3 years (personal injury/property damage)
- Texas: 4 years (contracts), 2 years (torts)
- Florida: 4 years (contracts), 2 years (torts)
- New York: 6 years (contracts), 3 years (torts)
- Pennsylvania: 4 years (contracts), 2 years (torts)
- Illinois: 10 years (contracts), 2 years (torts)
- Ohio: 8 years (contracts), 2 years (torts)
- Georgia: 4-6 years (contracts), 2 years (torts)
- North Carolina: 3 years (contracts/torts)
- Michigan: 6 years (contracts), 3 years (torts)
- New Jersey: 6 years (contracts), 2 years (torts)
- Virginia: 5 years (contracts), 2 years (torts)
- Washington: 6 years (contracts), 3 years (torts)
- Arizona: 6 years (contracts), 2 years (torts)
- Massachusetts: 6 years (contracts), 3 years (torts)
- Tennessee: 6 years (contracts), 1 year (torts)
- Indiana: 10 years (contracts), 2 years (torts)
- Missouri: 5 years (contracts), 5 years (torts)
- Maryland: 3 years (contracts/torts)
- Wisconsin: 6 years (contracts), 3 years (torts)
- Minnesota: 6 years (contracts), 2 years (torts)
- Colorado: 3 years (contracts), 2 years (torts)
- South Carolina: 3 years (contracts/torts)
- Alabama: 2 years following discovery
- Louisiana: 10 years (contracts), 1 year (torts)
- Acquisition.gov – 52.246-21 Warranty of Construction
- Saxton Stump – Risk of contractor liability for construction defects increases after Pennsylvania court ruling
- FindLaw – Construction Defect Laws by State
- Law 101 – How Long Is a Builder Liable for His Work?
- Free Advice – California Contractor Warranty Form
- M and G Law – Construction Defects in Arizona
- SDV Law – Statutes of Limitations and Repose for Construction
- Rutan – Limiting the Period of Liability for Construction Defects
- Kase Insurance – 6 Building And Construction Liability Statistics