Legal Definitions - collateral warranty

A collateral warranty is a type of warranty that is made by a third party who is not the original seller or owner of a property or product. This warranty only applies to the person who receives it and does not transfer with the property or product.

For example, if a contractor builds a house for a homeowner, the contractor may provide a collateral warranty to the homeowner that guarantees the workmanship and materials used in the construction. This warranty would not transfer to any future owners of the house, but only applies to the original homeowner who received it.

Another example is when a manufacturer provides a collateral warranty to a retailer who sells their product. The warranty only applies to the retailer and not to any customers who purchase the product from the retailer.

Overall, a collateral warranty is a type of warranty that is limited in scope and only applies to the person who receives it, rather than transferring with the property or product.