Is a Homebuilder Liable for Hidden Defects? PA Supreme Court to Decide

Homebuilder Liable

By Mark R. Fischer, Esq.

May 20, 2014

No one really knows what surprises lie ahead after purchasing a home.  That’s because many of the potential problems with a home cannot be seen by the purchaser, even with a reasonable inspection.  Also, even though problems may exist from the time the home is built, they may not reveal themselves until years after the work is completed.

Implied Warranty of Habitability

One of the ways the law protects new home buyers against the risk of these hidden defects (i.e., latent defects) is through what is called an “implied warranty of habitability.”  This type of warranty is not found in any written contract with the builder, but is instead implied in the purchase of the home.  It places the risk on the builder for any hidden defects that affect the purchaser’s ability to live in the home.  The types of defects covered by this implied warranty depend on the circumstances of each case and the cause of the problem, but they can range from foundation problems to leaking windows.  For many years in Pennsylvania, this implied warranty of habitability has been applicable to the purchase of a new home.  However, Pennsylvania law has remained unclear on whether this implied warranty passes on to a subsequent purchaser of the home.  Well an answer finally appears to be on the way.

Trial Court: Case Dismissed

On May 7, 2014 the Pennsylvania Supreme Court heard oral arguments in Conway v. Cutler Group, Inc. (Docket No. 80 MAP 2013), in which they will decide whether the implied warranty of habitability extends beyond the initial purchaser of a home to subsequent purchasers.  In the case, the homeowners purchased the home at issue from the original owners about three years after it was built.  After moving-in the new homeowners found water infiltrating the windows in the master bedroom.  An expert found the leaking to be caused by several problems with the construction of the home and recommended that the exterior of the home be stripped and redone.  The homeowners brought an action against the builder asserting a claim under the implied warranty of habitability.  However, the trial court dismissed the case, finding that the implied warranty only applied to the original purchasers of the home.

Initial Appeal: Implied Warranty Extended

The homeowners appealed to the Pennsylvania Superior Court [2012 PA Super. 242, 57 A.3d 155 (2012)], which reversed the trial court’s decision and ruled that the implied warranty of habitability does pass on to subsequent purchasers of a home.  The Superior Court explained that because the hidden defects in a new home may not materialize for several years, it would be unfair to let the builder off the hook for such defects just because the home is sold to a second owner a few years after it is built.  Although this ruling expanded the reach of this implied warranty, the Superior Court noted that there are limits to the rule.  For example, Pennsylvania law requires claims relating to the construction of improvements on real property to be filed within 12 years from the date the construction is completed, meaning the implied warranty of habitability can only last for 12 years.

Will This Ruling Become Controlling Law in PA?

The Pennsylvania Supreme Court will now decide if the Superior Court’s decision should be confirmed as the controlling law in Pennsylvania.  Stay tuned for an update on the Supreme Court’s decision.

If you are a homeowner or contractor with questions about this case or similar issues in Pennsylvania or New Jersey, feel free to contact Mark Fischer at 610-275-0700 or by email at mfischer@highswartz.com.

The information above is general: we recommend that you consult an attorney regarding your specific circumstances.  The content of this information is not meant to be considered as legal advice or a substitute for legal representation.

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