The Myth Behind North Carolina’s 1-year Construction Warranty
By: Paul Capua

The first time a general contractor client mentioned, matter-of-fact, that North Carolina law required general contractors to provide a 1-year construction warranty on their work, I was worried. As a construction lawyer who frequently negotiates and drafts construction contracts and warranty clauses for a living, I should know that. How could I have missed it?

Anxious of what I might find, I did some research, but nothing came up. I asked other attorneys in our office to do the same and they too found nothing. I moved on, as confident as one can be proving a negative. But then I heard it again from another general contractor, and another. The seeds of doubt were sprouting again when, just the other day, I heard it again: “. . . right, but North Carolina requires me to give a 1-year warranty.” I was in a meeting with a client and, as nonchalant as possible, I asked where she’d heard this. She said all contractors are taught it and that it’s common knowledge. I said I was sure no such requirement exists and when she glared back skeptically, I did the only honorable thing one can do under the circumstances: I bet her a dollar I was right. Our client politely declined and suggested I write this article instead.

North Carolina law does not require general contractors to provide a one-year construction warranty for their work. The belief that it does appears to be a common yet understandable misconception. This confusion likely arises because of the implied warranty of workmanlike construction and industry standards. Under North Carolina law, the implied warranty of workmanlike construction as articulated in Hartley v. Ballou exists by operation of law (i.e., is implied) and is not dependent on the existence of a written contract between the parties. That is, the implied warranty can exist whether there is a written agreement in place between the parties or not. But to say that the implied warranty is the same as requiring a warranty or even a one-year warranty is incorrect and contravenes a fundamental principle under North Carolina law that grants parties the freedom to allocate, by contract, risk in a construction project.

Not only is there no one-year warranty requirement, but under North Carolina law, parties to a construction contract are free to eliminate the implied warranty of workmanlike construction altogether. That is, the parties can negotiate and bargain for no warranties whatsoever or craft whatever warranty they choose, which can vary in both scope and duration. For example, in the wake of Hurricane Helene or other disasters contractors wanting to donate their services or provide them at below market rates would find this flexibility helpful.

I now think I understand why general contractors assume they must provide a construction warranty, and the confusion is well-founded. The law of contracts, which includes the law of express and implied warranties, is a confusing area of the law to begin with and legal precedent and statutory requirements have established standards that can make it even more confusing. Cases like Leggette v. Pittman and Allen v. Roberts Constr. Co., Inc. illustrate that building contractor’s warranties often include provisions that any defects arising within a period of one year will be repaired or replaced by the builder at no cost to the owner and require the owner to notify the builder of any nonconformities within one year.

Similarly, Dan King Plumbing Heating & Air Conditioning, LLC v. Harrison notes that in actions for breach of a construction contract, there is an implied warranty that the contractor or builder will use customary standards of skill and care based on the particular industry, location, and timeframe in which construction occurs. Without distinguishing between the type of warranty, I imagine most contractors would say that a one-year construction warranty is industry standard, perhaps reinforcing the belief among general contractors that they must provide it. And, while that may be true of express warranties, it is certainly not the case for implied warranties, which extend for three years (N.C. Gen. Stat. § 1-52) and possibly beyond. See N.C. Gen. Stat. § 1-50(5)(a).

These cases and standards might make it seem to the general contractor that a construction warranty is required when, in reality, it is not. Instead, it is far better to think of it this way: under North Carolina law a warranty will be implied by law and industry standards in the absence of a written warranty excluding it.

I’ll bet you a dollar I’m right!

Whether you are a builder or owner, it is important to understand how to negotiate and craft agreements that protect your interests and allocate risk suitable to the needs of your project.

If you are embarking on a construction project and want to learn more about managing risk, schedule a consultation with Capua Law.