Roofing Warranties and Callbacks When Buying a Roofing Company
A roof is expected to last for many years, and customers often receive warranties that last a long time as well. When a roofing company is sold, those promises do not disappear. Depending on how the deal is structured, the buyer may inherit responsibility for leaks and repairs on roofs installed long before closing. Roofing warranty liability is one of the issues that sets roofing acquisitions apart, and buyers who understand it early can price and structure the deal more confidently.
This article provides a general overview for buyers of existing, operating roofing companies. Warranty terms, manufacturer program rules and legal obligations vary, and buyers should review specific documents with qualified attorneys. Nothing here is legal or insurance advice.
Two Kinds of Warranties
- Workmanship warranties: issued by the roofing company, covering installation errors. The company is responsible for honoring them, and terms vary from company to company.
- Manufacturer warranties: issued by the maker of the roofing materials, covering product defects and, in some enhanced programs, certain labor. Some enhanced warranties are available only through contractors the manufacturer has certified.
What Happens to Workmanship Warranties in a Sale
In a stock or membership-interest purchase, the company itself continues, and its warranty obligations generally continue with it. In an asset purchase, the buyer may or may not assume those obligations, depending on the purchase agreement, though some buyers choose to honor past warranties to protect the company’s reputation and customer relationships. Our article on roofing company asset vs. stock purchases explains the differences.
Manufacturer Certifications May Not Carry Over
If the seller’s company holds a manufacturer certification or participates in an enhanced warranty program, buyers should not assume that status will continue automatically after a change in ownership. Manufacturers may have their own requirements for ownership changes, training or approval. Buyers should confirm directly with the manufacturer how the program will be handled.
Reviewing Warranty Exposure
- The company’s standard warranty forms and how they changed over time
- The number of roofs still under warranty, by type and age, if available
- Callback and warranty claim history, including costs
- Recurring problems tied to particular crews, products or job types
- How warranty work is tracked and scheduled
- Any disputes or claims related to completed work
Our roofing company due diligence checklist places this review in the context of the broader diligence process.
How Warranty Exposure Affects Price and Terms
A business with a long record of quality installations and few callbacks may carry less warranty risk than one with frequent claims. Buyers may account for warranty exposure in what they are willing to pay, and parties sometimes negotiate indemnification provisions, holdbacks or other terms addressing pre-closing work. Our articles on roofing company valuation and roofing company seller financing explain related considerations.
Insurance and Warranty Work
Insurance coverage for completed work and the handling of claims related to past jobs should be reviewed with an insurance professional, since coverage depends on the specific policies and how the transaction is structured.
Planning for Warranty Costs After Closing
Even well-run roofing companies receive some callbacks. Buyers should plan for the crew time and materials warranty work may require, and factor that into cash flow planning. Our overview of how to buy a roofing company explains where warranty review fits in the overall process.
US Professional Funding helps buyers finance the acquisition of existing, operating roofing companies. Learn more about our roofing business acquisition financing.
