Commercial Warranties

Commercial General Contractor Obligations Under Oregon Law

Effective July 1, 2008

What is a Commercial Warranty?

A commercial warranty is an obligation that a commercial building is free from defective materials or workmanship.A commercial warranty contains a promise to repair or replace the defective items or faulty work.A commercial warranty is not a guarantee. The work must be done to building industry standards.A commercial warranty need not cover items caused by owner neglect.

Warranty Requirements for Commercial Contractors – Structure

Applies to a Commercial General Contractor, Level 1 or Level 2, who constructs a new large commercial structure.

Does not apply to a contractor who constructs a residential structure or a small commercial structure.

“Large Commercial Structure”

A “large commercial structure” is:If a stand-alone building, has a ground area of more than 10,000 sq. ft.;If a unit in a larger building, has a ground area of more than 12,000 sq. ft.; orIs a building or unit that is more than 20 feet tall.

“Residential Structure”A “large commercial structure” is

not a “residential structure,”which is defined as: (1) a site-built home; (2) a structure with one or more dwelling units, four stories or less; (3) a condominium or other residential unit in a larger structure; (4) a modular home; (5) a manufactured dwelling; or (6) a floating home.

“Small Commercial Structure”

A “large commercial structure” is not a “small commercial structure,” which:If a stand-alone building, has a ground area of 10,000 sq. ft., or less;If a unit in a larger building, has a ground area 12,000 sq. ft., or less; andIs a building or unit that is no more than 20 feet tall; orIs a structure of any size for which the total cost of construction is not more than $250,000.

Warranty Requirements for Commercial Contractors – Coverage

Requires the contractor to provide the owner with a two-year warranty against defects in materials and workmanship of the building envelope and penetration components.

“Building Envelope”A “building envelope”

consists of the roof, exterior walls, ground floor, windows and doors. It separates the inside from the outside. A “building envelope” must balance the need for ventilation and daylight while providing protection from heat, cold and moisture.

“Penetration Component”“Penetration” means the act of entering into or through.“Component” means an individual part of something else. Building components may penetrate the building envelope – these could include window frames, roof vents, or outdoor light receptacles.

Warranty Requirements for Commercial Contractors – Inspection

Warranty must provide that the contractor inspects the building envelope and penetration componentsInspections will be once a year, during the period of the warranty

What Warranty Does Not Cover

The warranty does not need to cover conditions resulting from improper maintenance by owner.

How Long must a Commercial Warranty Offer Protection?

The warranty is for a period of two years.

How Much does a Commercial Warranty Cost?

It is up to the contractor and the owner to decide what, if any, amount the owner or purchaser will pay for the warranty.

Law Does not Apply to:Commercial General Contractors, Level 1 or Level 2, building small commercial buildings;Commercial Specialty Contractors, Level 1 or Level 2, building any commercial structure;Residential contractors, any endorsement, building any structure; orContractors licensed before July 1, 2008, who have not yet renewed in an endorsement, even if they build large commercial structures.