Georgia Construction and Licensing Law for Residential Contractors, Specialty Contractors and Home Owners

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Licensed Residential Contractors (and any affiliated entities) will be to offer a written warranty in connection with each contract to construct, superintend or manage the construction of, any residences where the total value of the work or activity or the compensation to be received by the contractor for such activity or work exceeds $2,500.00 as part of the Georgia contractor licensing law which is anticipated to go into operation on July 1, 2008.  The current warranty rule which was created very early in the licensing process (prior to 2007) will likely be changed and modified.  The state licensing board discussed this in their meeting in March, 2008.  As I pointed out to the residential division during that meeting OCGA 43-41-7 provides that a written warranty shall be offered by licensed residential contractors and that the residential contractor division of the Board shall establish the minimum requirements of the warranty.  The law also provides that the agreement to arbitrate is enforceable under the Georgia Arbitration Code. 
 
There are a number of debates among board members and construction related associations about whether the warrranty will be required to be provided at time of contract, whether there may be in effect an "as is" warranty (which is effectively no warranty) and whether there may be included contract clauses which provide that the failure of the home owner to pay the contract amount due in full will permit the contractor to withhold the warranty. 
 
Because the objective of the licensing board is to have the revised rule in place prior to July 2008, look for a new proposed rule to be promulgated soon so that it has time to go through the rule making process. 
 
For many contractors, this rule will require a change in your contracts.  For subcontractors and other construction professionals, and construction warranty companies, this may also have implications for your operations and supporting warranty requirements. 
 
 

After July 1, 2008

New Residential Warranty Rule Requirements Go Into Effect.

 

Under the contractor licensing law, new homes builders are required to offer a warranty which complies with the proposed warranty rule adopted by the Board in May, 2008 and which is subject to public comment.  The Board has required that the minimum standards for evaluating work and activities shall be those set forth in the current edition of the Residential Construction Performance Guidelines as published by the National Association of Home Builders.  A warranty may provide for a higher standard. 

 

Whether the rule applies to remodeling contractors is unclear.  The Board Minutes dated April 17, 2008 states:

 

Mr. Barnard asked if a remodeler would be covered. The Attorney General’s office will have to review this. Mr. Barnard stated that he thinks that the proposed rule addresses both sides. Under (3)(c) it states, “Standards for evaluating work and activities, which standards shall be those set forth in the current edition of the Residential Construction Performance Guidelines as published by the National Association of Home Builders;”