Central Air Conditioner Lemon Law and Warranty Information
If you’re reading this article, more than likely you are experiencing trouble with your new or newer home AC or heating system and wondering if you have a lemon. You are probably also wanting to know about air conditioner “lemon laws” and if you have any recourse for a troubled AC unit that is completely or partially out of warranty.
Or, you may be shopping for a new central HVAC system and are wondering if you should spend the additional money to purchase an extended labor warranty. Either way, this article should answer your questions.
Is There a Lemon Law for Air Conditioners?
We are all familiar with the term “lemon law” thanks to the used car industry. Many states have implemented lemon laws to protect consumers from unscrupulous used car dealers that purchase and resell cars that probably should have gone to the scrap yard as opposed to being resold.
As central air conditioning and heating equipment being installed is (or should be) sold new, out of the box, there are no lemon laws for these types of purchases. State lemon laws only apply to motor vehicles, not consumer products. This doesn’t mean you have no protection, you are most likely just protected in other ways.
Federal Consumer Protection – The Magnuson Moss Warranty Act
Under federal law manufacturers and suppliers are not required to warranty a product, the product may be sold “as is”. However, if a product does come with a written warranty this law protects consumers by enforcing that warranty. It is important to note that a consumer is required to allow the manufacturer or supplier reasonable opportunity to do so. The “reasonable” part is a matter of interpretation, so before you think you have the manufacturer by the throat, you may want to hold off on your next course of action.
The Magnuson Moss Warranty Act was implemented to prevent manufacturers from using complicated legalese such as disclaimers that are misleading. In the case of central air conditioners and heating systems, typically there is a manufacturer or factory warranty on the product itself (typically covering parts), and an installing contractor warranty (typically covering labor for a period of time specified).
The law is really designed to enforce the manufacture or supplier warranty, not the contractor warranty. Here’s why: Manufacturers who extend a written warranty can’t disclaim an implied warranty. However, contractors are not the party extending that written warranty so they (by law) maydisclaim implied manufacturer warranties on the products they sell.
I know that may seem confusing so let me put in in simpler terms. The manufacturer cannot refuse to honor a warranty. A contractor however can refuse service (let’s say in the case the relationship has gone sour), because the homeowner does not lose manufacturer warranty coverage and can hire another licensed contractor to complete the warranty work.
The contractor’s warranty is different however. If the contractor is the party extending the warranty, they are responsible to honor said warranty. Most often where I see consumers go wrong when coming in after the relationship with another contractor has gone bad, is not giving that other contractor reasonable opportunity to correct a problem. Most agencies, and consumer protection groups require a consumer make several reasonable attempts to allow the contractor to do so – and if not any chance of recourse is terminated.
Often in these cases, it can even be better to cut your losses and move on to a contractor you trust. You can sue but unless it’s a very large dollar amount often the only parties that win is the attorney’s.
What Should You Expect When a Newer HVAC System Fails?
Several times per year, we receive phone calls from an upset client who has experienced a breakdown or component failure on a newer system. Most often this occurs after the included labor warranty has expired, and/or the manufacturer parts warranty has expired.
As we install hundreds of new HVAC systems and other types of electro-mechanical machines annually, it is inevitable that a low percentage of these systems will experience some type of failure within the first few years of operation. This is especially true in Phoenix, Arizona where conditions are extreme and our systems rarely get a break. In a place like Flagstaff, AZ an AC might run the equivalent of a car driving 15,000 miles a year, here in Phoenix it would be the equivalent of driving 50,000 miles a year.
If you hired Magic Touch Mechanical as the installation contractor for your equipment, you are aware that we offer a number of different manufacturer options. As each has many model options, combined we offer every customer dozens of models to choose from.
We carefully measure failure rates of each manufacturer and model and only choose to offer the ones that have the lowest failure rates. As a result of tracking failure rates over the twenty plus years we have been serving clients in Arizona we have even completely discontinued selling several brands and certain models from various manufacturers for our clients (and frankly, our) protection.
As these products are both mechanical, electrical, and many contain heat-sensitive electronics; we never state it will neverexperience any type of failure, it’s just not reasonable to expect that.
Most of this equipment is made up of dozens if not hundreds of components and the failure of any one of these components can result in a breakdown of the entire system. It’s important to understand the failure of one component or material does not constitute a “bad unit” or a “lemon”. To use your vehicle as an analogy, if your check engine light comes on, and your mechanic finds parts needs to be replaced to get it running back to manufacturer specifications, chances are you would not call the entire vehicle a bad vehicle or a lemon – because you know there are hundreds of other components that are working as designed.
Understanding the Manufacturer / Contractor Relationship and Factory Warranties
As consumers ourselves, we understand how upsetting it can be when you make a large purchase and something fails after a labor or parts warranty has expired, the larger the purchase, the more upsetting it can be.
Sometimes clients are so upset they want to lash out at someone, and unfortunately for the installing contractor, most often that’s us. For that reason, it’s important to understand the warranty process and the relationship between contractors and manufacturers.
HVAC equipment manufacturers do not sell their products directly to the consumer. Only licensed HVAC Contractors can purchase these products. Your installing contractor buys the equipment you choose and all ancillary items on your behalf, however you as the end-user are extended the factory warranty and are responsible for maintaining it per manufacturer instructions.
The manufacturer alone sets the terms and conditions of their warranty and is obligated to honor that warranty per those terms. The contractor has nodecision-making power in this process whatsoever. The manufacturer is under no obligation to replace a unit that has had one, or even multiple failures (and they very rarely do or will). The manufacturers onlyobligation is to abide by the terms of their warranty (which in our experience they alwaysdo).
Using the auto industry as an example again, if you purchase a vehicle from ABC Dealership, your factory warranty is issued to you directly from the manufacturer. The dealership does not control what is, and what is not covered by the warranty. If the warranty covers parts only and not labor, you pay the dealership for their labor and any parts excluded from the warranty necessary to make the repair. The manufacturer supplies the parts or reimburses the dealership for any parts used out of their inventory. Neither the dealership or the factory replaces the car because it had a failure, they honor any warranties as specified in the purchase agreement (contract).
Understanding Your Labor Warranty
Your labor warranty is provided directly from your contractor. If you purchased your equipment from Magic Touch Mechanical, we provided you with a labor warranty which we promise to honor for the term listed on your paperwork. When we fulfill a warranty claim, the associated costs come directly out of our pocket. Manufacturers do not provide a standard labor warranty nor do the reimburse a contractor for labor claims.
While you may have paid thousands of dollars for your new HVAC equipment, you should know that the majority of what you spent covers the cost of equipment, materials, parts, payroll, and company overhead (trucks, insurance, building mortgage, etc.). Once all of those expenses are paid, the contractor is usually left with a profit of hundreds of dollars, not thousands of dollars. For that reason, a smart contractor wants to sell the most reliable equipment possible as labor warranty claims can take those hundreds to tens of dollars, zero dollars, and sometimes those labor warranty costs even exceed the profit the company made on your installation (sometimes referred to as “the cost of doing business”).
Air Conditioner Extended Parts and Labor Warranties
Just like when you go to a big box retailer or electronics store and they ask if you’d like to purchase an extended warranty on almost everything you buy now, you can purchase an extended parts and labor warranty that provides additional coverage above and beyond the standard warranties for HVAC units.
Magic Touch Mechanical works with several third-party companies that sell extended warranty coverage plans. We are not the party extending these warranty plans, just like the equipment, we can purchase them on our client’s behalf, but the coverage goes to the client directly not the contractor. Be cautious when purchasing or even accepting “included” extended warranties. If the warranty is “in-house” and the contractor goes out of business (which is not uncommon), you are the holder of an empty promise.
Typically, you can purchase this coverage to cover yourself for up to ten years from the date of installation. If your equipment is several years old, you still may be able to buy coverage pro-rated. With these plans there is often an out-of-pocket deductible you pay to cover the visit similar to a health plan when you pay an office visit. Also similar to health insurance they provide a detailed coverage list of what is, and what is not covered.
Pricing of extended warranties varies depending on; length of coverage, brand, accessories, type (heat pump, gas furnace, air handler, etc.), and configuration (rooftop package unit, split-system, ductless, etc.). 10-year labor warranty plans typically range in cost from $1200 – $2800.
In Most Cases, the Contractor is on YOUR Side!
You are the contractors client! Neither the manufacturers nor the warranty companies are the contractor’s clients, in fact the contractor is theirclient.
A good contractor will always do everything in their power to come to your assistance, but understand; AC equipment manufacturers are multibillion-dollar corporations who sell millions of pieces of equipment annually. Even the largest contractors in the country are a speck on the map compared to these corporate giants. The best thing you can do is align with your contractor and see them as your ally, not the enemy. The minute you start yelling at, threatening, or disparaging the installing contractor, the more likely you are to get a less than favorable outcome. You catch more flies with honey than you do with vinegar!
If we assume a failure rate of 5%, we are talking about hundreds of thousands of newer systems that break down annually – per manufacturer. From our view, it is unfortunate when one of our clients is one of those 5% and we empathize with every one of them…andwe don’t like it any more than they do when it happens. However, we also know it is inevitable because we install a lot of equipment.
How New is Your New System? Manufacturer Suggested Life Expectancy
Here’s some information that can help you determine if an extended warranty is right for you:
Although we can usually keep HVAC equipment running as long as parts are available and have clients with equipment as old as 30-years old, that’s not always the most cost-effective plan. Unlike, equipment manufactured in the past, most manufactures suggest the life expectancy of today’s equipment is about 12-15 years (which explains why most provide up to a ten-year warranty). The exception being some ductless models which have a longer life expectancy than conventional central air and heating equipment.
Using that manufacturer life expectancy data, your HVAC System uses up between 6.7% to 8.3% of its useful life each year. By its third year, a system has used up between 20% and 25% of its life. When you consider some of this equipment may have used up ¼ of its life in three years it’s a little easier to understand why the industry no longer considers that unit new.
Do You Need Help With an AC Unit That Keeps Breaking Down?
We know our blog is well read, from people all over the world. We are a local company that services clients in the Phoenix, AZ area only. If you live within 30-miles of Mesa, Arizona we can help!
If you live outside of our service area, try contacting your local Better Business Bureau or check out reviews on consumer review websites like Angie’s List or Kudzu to find highly rated service providers in your area.