Understanding construction warranties in Tennessee

The construction of a new home or building is a major project, and everyone hopes that the process will run smoothly, resulting in a mutually beneficial result for both parties. The buyer expects to get what they paid for, while the builder profits from their hard work and effort.

Express and implied warranties

When a buyer’s expectations are not met, they may attempt to assert a breach of warranty. There are two types of warranties under Tennessee law. The first type is an express warranty, which is the type of warranty most people are probably familiar with.

An express warranty is usually contained in a contract between the buyer and builder. The warranty language specifies exactly what the builder must do and what the buyer should expect. Tennessee law states that a breach of express warranty claim may be brought for deficiencies in the design, planning, supervision, observation of construction, or the construction itself.

A buyer who wants to bring an express warranty claim must show that damages occurred to either the property or to a person. The claim must be brought within 4 years of the construction project being substantially completed.

Tennessee law also provides for an implied warranty of merchantability in construction projects. The idea behind this warranty is to recognize that buyers of a newly constructed home or building have a legitimate expectation that the materials used and building process will meet a certain standard. This standard is generally determined by looking at similar homes in other locations.

An implied warranty of merchantability automatically exists in the contract, and usually this warranty cannot be waived by the buyer through adding waiver language to the contract.

Open communication between parties is essential

Both builders and buyers should be aware of express and implied warranties and communicate regularly to avoid issues. If a breach of either one is claimed, proving the breach, and determining appropriate damages can be challenging. Having knowledge and guidance along the way can help resolve a potential breach claim, to ensure everyone’s expectations are met.