Builder’s Implied Warranty of Habitability Applicable to Subsequent Purchasers of New Construction in Pennsylvania

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Pennsylvania courts have long recognized the implied warranty of habitability from a builder of a residence to the initial purchaser.  In a decision published on November 5, 2012, the Pennsylvania Superior Court determined that this warranty may also benefit a subsequent purchaser of the residence.

The implied warranty of habitability is a creation of public policy which shifts the risk of certain latent construction defects to the builder.  The implied warranty of habitability covers defects which would not be apparent to the ordinary purchaser as a result of a reasonable inspection.  Pennsylvania courts recognize the implied warranties of habitability and reasonable workmanship as necessary to equalize the disparate positions of the builder and home purchaser by safeguarding the reasonable expectations of the purchaser.

The case of Conway v. Cutler Group, Inc. involves a residence constructed in September 2003.  The original purchasers sold the residence to the Conway’s in 2006.  In 2008, the Conway’s discovered water infiltration around the windows of their master bedroom.  An assessment of the residence by an engineering firm found several structural defects.

The Conway’s filed a complaint against the builder, Cutler Group, Inc. (“Cutler”) asserting a breach of the implied warranty of habitability.  Cutler filed preliminary objections stating that under Pennsylvania law the implied warranty of habitability only extends from the builder to the initial purchaser of the residence.  The trial court agreed with Cutler and dismissed the complaint.

On appeal, the Superior Court recognized the case as a question of first impression in Pennsylvania.  The implied warranty of habitability is initially triggered by a contract for a sale of a newly built home.  The Court found, however, the implied warranty of habitability exists even in the absence of a contractual relationship between the builder and the current homeowner because a second or subsequent purchaser is entitled to the same assurances as the original purchaser.  The Court reasoned that a second or subsequent purchaser implicitly relies on the homebuilder’s skill that the home will be free from latent construction defects affecting habitability regardless of how many times title changes hands.

In reaching its conclusion, the Court emphasized that the implied warranty of habitability targets defects which would not be apparent to the ordinary purchaser as a result of a reasonable inspection.  Structural defects in homes may not manifest themselves for many years.  However, the defects may nevertheless have existed since the completion of the home by the builder.  The Court did not believe that the risk for latent defects should be shifted from the builder back to a second or subsequent homeowner.

The decision does not lead to unlimited liability for builders.  A homeowner still has the burden to show that the alleged defect is latent, attributable to the builder’s design or construction, and affects habitability.  In addition, under Pennsylvania law any homeowner must bring a claim for breach of the implied warranty of habitability within twelve years after completion of construction of the home.

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