Pennsylvania Superior Court Declares That Second Buyers of Homes Have Same Implied Warranty Rights as Original Buyers in Claims for Construction Defects
On the day before the 2012 Presidential Election, the Pennsylvania Superior Court elected to extend to remote purchasers of homes the same implied warranty rights against builders and developers as held by original purchasers. In Conway v. The Cutler Group, Inc. the Superior Court, declaring this as a case of first impression, held that a second owner of a residential home has the same right as an original owner to recover against a builder developer for a breach of the implied warranty of habitability. The court did not consider whether the second powerful implied warranty right – the implied warranty of reasonable workmanship – was also available to remote purchasers because the attorney that filed the Conway case did not plead that warranty.
In construction, the implied warranty of habitability is a fiction created by the courts to express what has been determined by the courts to be a justifiable assumption that when a builder builds a structure, it can be safely assumed that it will be habitable. Pennsylvania courts have held that the implied warranty of habitability has been breached in a number of different contexts. Absence of potable water, Elderkin v. Gaster, 447 Pa. 118, 288 A.2d 771 (1972); defective furnace emitting excessive levels of carbon monoxide, Pontiere v. James Dinert, Inc., 627 A.2d 1204 (Pa. Super. 1993); presence of lead based paint, Lititz Mut. Ins. Co. v. Steely, 785 A.2d 975 (Pa. 2001); leaking skylights, Fetzer v. Vishneski, 582 A.2d 23 (Pa. Super. 1990); leaky basement, Ecksel v. Orleans Const. Co., 519 A.2d 1021 (Pa. Super. 1987); and leaky crawl space, Tyus v. Resta, 476 A.2d 427 (Pa. Super. 1984).
In determining in the Conway case that subsequent purchasers should have the same rights as original purchasers, the court leaned heavily on a 1990 Superior Court case called Spivack v. Berks Ridge Corporation and reasoned, “the warranty is based upon public policy considerations and is not a contractually dependent remedy. … [W]e see ‘no logical reason to limit a builder’s implied warranty to his immediate vendee.’” Then, reaching back all the way to the 1972 Pennsylvania Supreme Court case of Elderkin v. Gaster, which is the case that started it all, the Conway court stated, “a purchaser of a new home ‘justifiably relies on the skill of the [builder] that the house will be a suitable living unit.’ Elderkin at 776…. By the same token, a second or subsequent purchaser also implicitly relies on the home builder’s skill that the home will be a habitable one.”
More and more, the law of construction defect litigation resembles strict product liability. To recover for injuries suffered from a defective product, a plaintiff need only show that the product was unreasonably dangerous for its intended use and that the defect was a proximate cause of the injury. The plaintiff need not show that the manufacturer knew or should have known that the product was defective, i.e., negligence. And any person victimized by a defective product – first owner, second owner or even a bystander – has the same strict liability rights against the manufacturer.
In Conway, the Pennsylvania Superior Court has extended the construction defect theory of implied warranty of habitability to the benefit of persons who buy a home (or presumably any other building) from the earlier owners. No courts have yet considered whether to extend the implied warranty of habitability to non-owners.
A key difference between strict liability under product liability law and implied warranty under construction defect law, is that a builder developer can legally disclaim liability for the implied warranties of habitability and reasonable workmanship. If the contract (typically the Agreement of Sale) between the builder developer and the original purchaser contains a properly worded and conspicuous disclaimer of the implied warranties, such a disclaimer is enforceable and the builder developer cannot be held liable for breach of the implied warranty.
In construction, proper contract drafting can potentially eliminate or at least reduce the exposure to liability under the law of implied warranty.
- If you are a builder developer, the attorneys at White and Williams LLP can review and revise your contracts to get for you the best protection available according to the current law of the state where your project is being built.
- Also, if you are a builder developer or general contractor, you can protect yourself with your subcontractors and vendors by contractually shifting the risk to the companies actually doing the work and supplying important components such as windows, weather resistant barriers, steel, concrete and mechanical systems.
- If you are a subcontractor or vendor, negotiating small changes in contract language can help you reduce or avoid taking on any more risk for a developer or general contractor than absolutely necessary.
You may have gone through contract review and revisions at one point in your recent business past, but as we see with the Conway case, the law changes. The attorneys at White and Williams LLP can make sure that your contract language takes into account the most recent decisions of the courts and any changes in laws or regulations to minimize your exposure and maximize your protection for your projects.
For more information regarding this alert, please contact Mark Parisi (215.864.7180 ; email@example.com).
 2012 Pa. Super. 242, Nov. 5, 2012
 Such a claim would involve a building that is allegedly not habitable which for that reason causes property damage to a non-owner. Example – a defectively built chimney falls onto a neighbor’s car parked next door in his own driveway.