Published on: November 4, 2001
Nobody would ever purchase a product which had a 10-year warranty which excluded labor and materials. Or would they? During the 1980’s, there were various problems with alleged improper manufacturing of shingles. The problem related to the shingles having a high degree of fiberglass, as opposed to asphalt. The problems that have manifested themselves is that the shingles have exhibited a greater degree of cracking and/or splitting than other types of shingles. Most, if not all, of the shingles were warranteed by the manufacturer. A reasonable community association board might think that a 10-year warranty would actually give the association some protection. However, that does not appear to be the case.
The problem is that numerous shingle manufacturers have refused to either acknowledge the defect itself and/or to compensate the community association for the labor necessary to repair the roof with the problem. In addition, the typical warranty prorated the recovery so that if there was failure in year nine, an association would only recover 10% of the cost of the shingles. One further problem has been the reluctance of roofing manufacturers to honor the warranty as it relates to subsequent purchasers. This would be a problem if either the developer purchased the shingles or if units were sold to subsequent buyers.
What appears to be a reasonable solution is one that an association in Florida utilized. The association paid additional funds for a warranty which would not prorate the recovery and which would provide for the labor costs. One would think that surely that association had protected itself. However, the typical roofing manufacturer’s contract warranty states that if a problem is discovered during the first two years, then the rights of the association are against the roofing installer and not against the manufacturer. In the case in Florida, the roofing installer was insolvent and therefore the association is just now in the process of investigating what claims it can bring against the roofing manufacturer to honor their obligations.
Although one could argue that the problem relates to associations having a false sense of security in knowing that a warranty exists and therefore not reviewing the warranty, the problem actually appears to be not that simple. The Attorney General’s offices in both Massachusetts and Connecticut have both investigated claims from consumers which in essence allege that these types of warranties are unfair and deceptive. In Massachusetts a consent decree has been signed with one large roofing manufacturer and the Attorney General’s office relating to this issue. However, even that consent decree does not include the cost of labor as part of the remedy to the consumer.
In addition to bringing these types of cases to the attention of the various state Attorney General’s ffices, it would seem that as an industry, community associations could negotiate with roofing manufacturers and others on a global basis to insure that community associations do not find themselves in the position of having what amounts to a useless warranty. The powers based on the sheer number of community associations throughout the country would seem to indicate that community associations could dictate with whom they will do business. However, the effort has to be unified among the various interest organizations such as CAI, CACM, COCO, ECHO and SCORN.
I suppose the hard lesson to be learned from this one example is that community association boards must know what their contract says, must insure that they are reasonably protected by the provisions of any contract and must read and understand any warranty offered by a contractor or manufacturer. Community association boards typically enter into contracts with the idea that all will go well. Community association practitioners typically negotiate contracts assuming that all will go wrong. There has to exist a happy medium whereby community associations can be reasonably protected when they enter into significant contracts.