Repair & Improve

Happy Home Improvements

Contracts, Guarantees, Warranties and Service Contracts all play an important part in making sure your job comes out as expected

Homeowners taking on a home improvement project receive a lot of promises. The contracts, change orders, project guarantees and product warranties which consumers must deal with all seem to have one thing in common:  the goal of customer satisfaction.  But what do all these documents really mean and are they all a necessary part of the home improvement project?

Written contracts are the absolute bare minimum required for all home improvement projects.  The written contract is the tool that spells out everyone’s expectations and responsibilities for the project.  Most home improvement problems do not arise from crooked contractors.  Many erupt because the homeowner and contractor have different expectations for the project.

Project guarantees, relatively new on the home improvement scene, are a response to the public’s concerns about the reliability of remodeling professionals.   Several home improvement retailers and online home improvement services, as well as a few independent remodelers offer them.

Manufacturers’ warranties are also standard for products used in home improvements, and are the assurance from manufacturers that their products will work as intended under the circumstances prescribed for use.  Service contracts, sometimes called extended warranties, provide additional protection, but are not included in the selling price of the product.

Contracts
A contract is a document clearly stating the expectations and responsibilities of each party involved in a home improvement project. It protects each party’s rights, reflects a trust between the parties, and should demonstrate a thorough understanding of the budget, project details, and what the homeowner hopes to accomplish through the work being done.

A standard project contract includes sections that describe:

• the scope of work, materials and equipment;
• the work and payment schedules;
• confirmation of the contractor’s ability to provide proof of all required insurance, and
• confirmation that all written warranties on materials and products will be delivered to the homeowner.

Just as important as the initial contract are related documents like change orders and punch lists.  A change order is a notice describing a change to the project contract.  They are typical in home remodeling, either to make a change in product selection, or if the scope of the job has changed due to an unforeseen circumstance.  Change orders need to include a description of the task to be performed as well as the resulting labor and materials costs.  If the project completion date is impacted by the change order, it should also list the newly agreed to date.

Since many home improvement project disputes result from a lack of communication between the contractor and customer, use of change orders is an important tool to avoid misunderstanding that can later result in serious disagreements.

A punch list is used at the time the project is nearing completion.  It is a checklist of all items to be finished or fixed before a project can be regarded as complete.  Usually generated via a walk-through by the homeowner and contractor, punch list items should be resolved and signed by both parties before the final project payment is issued.

Guarantees
While some independent contractors are now offering guarantees, they are more common from home improvement retailers, such as Home Depot and Lowe’s.   Guarantees add an extra layer of assurance for homeowners who are concerned about becoming another home improvement horror story statistic.

A good contract provides homeowners with a similar level of protection as most guarantees.  But most homeowners don’t want to think about the hassles of trying to go through the legal system to enforce a contract .  A project guarantee means that the company assumes the responsibility to assure that your project is completed to contract specifications.

Manufacturers Warranties
According to the Federal Trade Commission (FTC), although manufacturers of most major purchases do have written warranties, the law does not require them.  All products are covered by “implied warranties” that can last as long as four years, although the length of the coverage varies from state to state.   Federal law mandates that written product warranties be available for review before a product is purchased.  You can compare warranties for the period of coverage, what action the manufacturer will take in the event of product failure, and details of repair coverage and any associated labor charges.

It is important to save and file warranty documents with the product purchase receipts in case you ever need to file a claim.  Keep in mind that consumers do not need to fill out and return the warranty card for the written warranty to be valid.  But filling it out and returning it may be the only way a manufacturer knows how to reach you in the event the product is later determined to be defective and the subject of a recall. If your warranty card asks for prying information like income level or outside interests, ignore these questions and simply return it with your contact information only.

If problems arise that are not covered by the written warranty, you can investigate whether or not you have additional protection through your implied warranty by contacting your state consumer protection agency.

Extended Warranty Programs
Extended warranty programs-also known as service contracts-may also be offered for an additional cost. The FTC recommends the following to determine whether you need a service contract:

• Whether the warranty already covers the repairs and the time period of coverage that you would get under the service contract;
• Whether the product is likely to need repairs and the potential    costs  of such repairs;
• The duration of the service contract;
• The reputation of the company offering the service contract.
  Also keep in mind that some credit card companies, like American Express, will double the manufacturer’s warranty on purchases made with their card.  These programs have limitations too, but they are free and can lessen the need to pay for extended coverage.

Bottom line: homeowners are not powerless when it comes to assuring a positive home improvement experience.  Don’t work with any contractor who balks at a signed contract, consider the advantages of a project guarantee and save your product warranty information to make sure your dream home improvement project doesn’t become a nightmare.

FREQUENTLY ASKED QUESTIONS
Wouldn’t homeowners want the broadest guarantee they can find?

It depends.  With a company like Home Depot, a homeowner can be pretty confident that Home Depot is going to do whatever it takes to make the project a success.  But with an independent or smaller company, you’d want to know very specifically what the guarantee covers, and what you need to do if you think the project has not been completed to the contract specifications.

What if I don’t get a written warranty with my product?
Most new products have a written warranty provided by the manufacturer.  If your warranty is missing, you should contact the manufacturer for a replacement, or simply check their web site to see if it’s been published.  During home improvement projects, it is easy to lose or misplace warranties shipped with each product.  It’s important to keep a warranty file on each project so you’ll have an easy place to retain these important documents.

Are service contracts ever a good thing to consider?
Maybe.  If the product is expensive to repair, like electronics, it might make some sense to take out the service contract.  It also might be smart if you have a very low tolerance for unexpected repair expenses.  For most new household appliances however, services contracts are not the best investment.  The repair incidence is low and the cost of repair not likely to break the bank.  Keep in mind that some credit card companies, like American Express, will double a manufacturer’s warranty simply for using this company’s credit card to purchase a product.  This is like getting a “free” extended warranty simply for making the purchase through your credit card.

Do I have to send in my warranty card for every product?  Do I have to fill out all the personal information on the card?
No.  Warranties should be valid whether or not you return the warranty card.  However, there is an important safety benefit to returning these cards.  If the product is ever included in a recall, the manufacturer will know how to contact you.  As for the personal information which is often requested, you are under no obligation to provide this.  And, you may also want to check the box that tells the manufacturer to not sell your name or include you in promotions other than product recalls.

Do I need a lawyer for my home improvement project contract?
Not necessarily.  However if the project is sizeable, it does make sense to have an attorney review the contract.  The basis of most disputes is a lack of communication.  An attorney can make sure the contract is clear and both parties expectations are spelled out.  In any event, it is extremely important that you have a written agreement between yourself and the contractor for any size job.  Spelling out the scope of the project is the best way to assure the finished project is what you expect.

If I have a contract and warranties on all my products, do I need to find a remodeler who offers a project guarantee?
Yes.  A project guarantee that assures completion in accordance with the contract is very important.  The contract spells out what will be done.  The warranty assures that the products will perform as expected.  But only the project guarantee will make sure this all comes together.

What is the most common problem: product failures or installation failures?
The manufacturing process generally assures consistency of product.  Therefore, products typically will not fail if they’ve been installed in accordance with manufacturer specification.  Installation, however, is subject to human inconsistency on a day-by-day, moment-by-moment, basis.  Making sure you work with only highly qualified and experienced professional contractors is the best way to assure products will be installed as designed, thereby minimizing any problems.

If my contractor doesn’t have me sign a change order, can I hand him one of my own to sign?
Yes.  Keeping track of change orders is very important, especially if you want to avoid “surprise” costs at the end of the job.  Make sure the change order specifies the change, reflects the original cost of the job and, most importantly, reflects any additional charges owed or credits due as a result of the change to the original contract.

If my contractor doesn’t offer a change order and/or formal punch list, can I create one of my own for us to sign?
Again, yes.  Written communication is very important in order to avoid potential misunderstandings and to create a written record of expectations should any disputes arise.  With “punch lists” (a list of repairs typically prepared by the customer at the end of the job), it would be important that the contractor agrees in writing to address all items.

Are verbal contracts ever valid?
Yes, but they are very difficult to enforce.  Disputes over verbal agreements often deteriorate into a “he said – she said” match where neither party can prove what was agreed to.  Therefore, a written agreement, along with written change orders and punch lists is the best way to make sure your home improvement project comes out as expected.

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