What can I do about a warranty after a company has gone out of business?
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What can I do about a warranty after a company has gone out of business?
My wife and I paid over $14,000 to have our basement waterproofed by a company. We were assured that our lifetime warranty would cover
anything that ever leaked in our basement and would be transferable to the next owners of the house. It has been about 2 months since the completion of the work, and we had many issues with along the way, and our basemment is now leaking from under the same wall again. Also, the sump pump they installed hasn’t kicked on once. Since the company has closed up, I’m not sure what to do. I feel that the work was not completed correctly in the first place but I still have to pay off the loan for the work.
Asked on September 10, 2018 under Business Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
If the company was a sole proprietorship, you can sue the owner: he is personally liable for any company obligations, since with a sole propreitorship, there is no distinction between the company and the owner--they are one and the same.
If it was an LLC or a corporation, however, the owner is not personally liable except in very limited cases (see below). In this case, if the warranty was with an LLC or corporation and the LLC or corporation is out of business, there is generally nothing you can do: only the company would have to honor the warranty, but it is not around anymore.
In some cases, you can "pierce the corporate veil" to hold the LLC's or corporation's owner(s) personally liable, but to do this, you have to be able to show--prove--that the LLC or corporation was a sham, with no real independent existence (no real separation from the owners) and was used for the purpose of defrauding those doing business with the company. This is VERY difficult to do and is only rarely successfully--the liability protection afforded by LLCs and corporations is quite strong. If you want to explore this option, consult with an attorney.
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