Q: I recently had a roof put on an investment property, but even though the contract calls for 30-year shingles, the contractor put on 20-year instead. He admitted the mistake and offered to credit me $340 — the difference in the cost of the materials.
My issue is not the cost of materials but the fact that I’ve lost 10 years on the life of my roof for a measly $340. I plan to keep the property for my retirement (I’m 34), so in all likelihood I will need to replace the roof in 20 years rather than 30. My question is: How do I put a value on these 10 years? What would be the correct amount to credit me to level the value that I’ve lost?
I want only what’s fair and am not trying to gouge the contractor. I understand that mistakes happen. Also, I would rather just figure out a value than have the contractor go back on the roof to replace the shingles, which will cost him money and give me a headache. What are my options here? How much should I be credited to make things fair?
A: This is a tough one. You can accept the $340 the roofer is offering. You can sue him for specific performance of the contract. To wit: Rip off the roof and install the shingles you contracted for. Or you can try to negotiate a reasonable compromise. We’d opt for the last.
We can see the roofer’s point of view. The labor to put on a 30-year roof is the same as that for putting on a 20-year roof. So from the roofer’s viewpoint, the only difference is the cost of the material. He is offering to reimburse the difference to you. In his mind, he’s making you whole. What it doesn’t take into account, and what you recognize, is that the useful life of the roof is reduced by 10 years.
We agree with your assessment that the reduction in the roof’s life is worth more than the mere cost of materials. We recommend that you don’t accept the roofer’s offer.
We also recommend that you don’t sue the roofer, unless you absolutely have to. It’s our belief that controversies are better settled by the parties themselves rather than by the court. Filing a lawsuit should be the last resort. If you sue and you win, you’ll still have the mess of the re-roof on your hands.
Before we get into our suggestion for valuing the difference between 20-year shingles and 30-year shingles, it’s helpful to understand that these figures are approximations only. Twenty-year shingles and 30-year shingles refer to the manufacturer’s warranty period. The actual time the roof lasts can be greater or lesser than the warranty period.
In severe climates such as Florida or the Gulf states, the useful life is less because of sun, humidity and wind. In temperate climates such as the San Francisco Bay Area, the useful life is longer. In either case, a 30-year shingle should outlast a 20-year shingle.
In coming to a fair valuation for the credit you are due, we suggest you keep the analysis as simple as possible. You could get into a convoluted valuation scheme taking into account the time value of money for a future replacement some 20 to 30 years down the road. But we advise against it. Such analysis is counterproductive and probably will not result in a successful negotiation.
To come up with a reasonable compromise, we’d try to factor in the cost of both labor and materials using today’s dollars. By way of example, let’s say the cost of the roof was $5,000. We’d prorate the roof over both 20- and 30-year periods.
Divide $5,000, for instance, by 20 and the cost of the roof for the 20-year shingle is $250 per year. If you had gotten the 30-year shingles you contracted for, the assumption is that the life of the roof would be 30 years. Divide $5,000 by 30 for a cost of $167 per year. The cost difference between a 20-year roof and a 30-year roof is $83 per year. Multiply $83 by the 10 years of useful life you’ve lost and the amount is $830.
We recognize that the cost of your roof is probably different. Just plug in your cost and use the same methodology to come up with your specific number.
The number you come up with is just a starting point, but it is based in reason and seems like a fair way to reach a compromise. It’s also one that a small-claims judge or an arbitrator-mediator might accept. Good luck, and let us know how things turn out.
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