Pennsylvania Appellate Court Holds Builder’s Implied Warranty of Habitability Extends to Subsequent Purchasers

The Superior Court of Pennsylvania recently held, in the matter of Conway v. Cutler Group, Inc., that a builder’s implied warranty of habitability extends beyond the initial purchaser to subsequent purchasers of a home.

In the Conway case, the second homeowners of a house built in 2003 discovered water infiltration around windows in their master bedroom approximately two years after they purchased the home.  The second homeowners smartly retained an engineering and architecture firm to assess the water infiltration problems.  Someone from the firm inspected the second homeowner’s home and prepared a report stating that the home suffered from several defects that required correction.

Thereafter the second homeowners filed a one count complaint against the builder of their home asserting a claim for breach of the implied warranty of habitability.  [Note:  Keep in mind that the second homeowners could not sue the builder for breach of contract because, as second purchasers, they never had a contract with the builder.]

At the trial level, the builder successfully argued for the dismissal of the complaint on the basis that the implied warranty of habitability only extends from the builder to the initial purchaser.  The second homeowners appealed to the Superior Court of Pennsylvania.  The Superior Court of Pennsylvania found that the question of whether a builder’s implied warranty of habitability extends to subsequent purchasers of a home was an issue of first impression, meaning it was an issue that had not been heard by the court before.

In holding that a builder’s implied warranty of habitability applies to subsequent purchasers of a home, the court reasoned that the purpose of the implied warranty of habitability is to equalize the disparate positions of the builder and the average home purchaser by safeguarding the reasonable expectations of the purchaser.  According to the court, it would be nonsensical not to extend the implied warranty of habitability to subsequent purchasers because subsequent purchasers are in no better of a position than initial purchasers to discover latent defects with a home and to hold otherwise would create absurd results.  For example, the court stated that to rule otherwise would create a result where an original homeowner could recover under the theory of breach of the implied warranty of habitability where the initial homeowner discovered defects with the home five years after it was built, but a second purchaser could not recover if it discovered the same defects, in the same home, five years after it was built.

While this opinion may certainly alarm homebuilders, the court did point out that the implied warranty of habitability only covers defects which would not be apparent to the ordinary purchaser as a result of a reasonable inspection.  Therefore, in the Conway case, if the second homeowners should have been able to discover the water infiltration issues as a result of a reasonable inspection, the builder could have argued that the implied warranty of habitability should not have applied.  Moreover, while it may be cold comfort to builders, all homeowners, regardless of whether they are a first or subsequent purchaser, must bring a claim for breach of the implied warranty of habitability within the 12-year period of the statute of repose.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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