Generally, the owner of property waives defects that are easily discoverable upon inspection when they take occupancy of the premises, accept the work, and pay for it.  The parties to the contract may avoid this often unintended waiver, however, by including a provision in the contract to the contrary.

A “warranty” or “guarantee” clause can be included in a construction contract as to cause the party doing the work to guarantee that the work is free of defects for a specific period of time.  Such a guarantee provision generally provides for a period during which the party doing the work must remedy any defects on the property as a result of their work.  In the event this clause is for a limited warranty, such must be specifically stated within the contract.  General Business Law § 777-b(4) requires the following disclosures in the limited warranty: what the builder and any other warrantor will do when a defect covered by the warranty does arise, and the time within which the builder and any other warrantor will act; and step-by-step claims procedures required to be undertaken by the owner, if any, including directions for notification of the builder and any other warrantor.

Likewise, where a contract specifically disclaims the existence of warranties or representations, a cause of action alleging breach of contract based on such a warranty or representation cannot be maintained.  (Simone v. Homecheck Real Estate Services, Inc., 42 A.D.3d 518, 840 N.Y.S.2d 398 [2d Dept. 2007])

If the defect is latent, and not obvious prior to the purchase or occupancy of the property, though, occupancy will not operate as a waiver of the defects.  In Ting-Wan Liang v. Malawista, 70 A.D.2d 415, 421 N.Y.S.2d 594 (2d Dept. 1979), for example, the contract between the purchaser of the home and the contractor provided that the contractor would guarantee against defects of materials and workmanship for a period of one year after the date of completion of the contract.  Upon occupancy of the home, the homeowners discovered several latent defects, including but not limited to poor drainage.  The court found that despite their occupancy of the home, the homeowners had not waived any defects of materials or workmanship.  Certain defects that may arise well after the occupancy of a home, such as draining issues, are not considered to be easily discoverable by the purchaser, and therefore cannot be waived.  As a result, the contractor was ordered to pay damages to the purchaser for the injuries he sustained as a result of the faulty work so as to allow the purchaser to have the defect remedied.

As a result of the possible waiver or non-waiver of defects, a contract should specifically spell out any warranties associated with the work being done.  If a warranty clause exists, it must be specific as to time and work that will be remedied by the party doing the work.  If a no-warranties clause exists, it must be obvious to all affected parties that a waiver of defects is automatic.

Notwithstanding a waiver of defects or a limited warranty, a minimum implied warranty exists in the contract or agreement for the sale of a new home and shall survive the passing of title pursuant to GBL § 777-a.  This is a warranty the homeowner may invoke without any specific contractual provisions alluding to it.  This section provides that the home will be free from defects due to a failure to have been constructed in a skillful manner for one year from the warranty date.  Additionally, the plumbing, electrical, heating, cooling and ventilation systems of the home are guaranteed to be free from defects due to a failure by the builder to have installed such systems in a skillful manner for two years from the warranty date.  Lastly, the home is to be free from material defects for six years from the warranty date.