In a previous edition of this newsletter we reported on the case of Conway v. Cutler, in which the Pennsylvania Superior Court held that a second (or subsequent) purchaser of a home could bring a claim against the builder of a home for a breach of the “implied warranty of habitability.”
The implied warranty of habitability is the legal assurance that a home is fit for human habitation. It is well established in Pennsylvania law that a builder owes such an implied warranty to a buyer who has purchased the home directly from the builder. What was at stake in Conway v. Cutler was whether the purchaser from the original purchaser had the same sort of claim against the builder. In legal terms the issue was whether a purchaser had to be in privity with the builder (that is in direct contract with the builder) to enjoy the benefits of the warranty. The Superior Court determined that no such privity was required and that a second and subsequent purchaser could bring such a claim. The consequences of this decision were significant (perhaps enormous) to home builders who feared on-going claims from purchasers of “used” houses.
Since that time the Supreme Court has overturned the original decision in Conway reinstating the requirement of privity. The Court stated as follows: “we decline to extend the implied warranty of habitability beyond its firm grounding in contract law. Under the facts of this case, where the builder-vendor sold a new home to a purchaser-user, we hold that an action for breach of the implied warranty requires contractual privity between the parties.”
Based on this, Pennsylvania home builders can breathe easier. However, interestingly, the use of “purchaser-user” in the Court’s holding may open loopholes. For example, a builder who sells to a first buyer where the first buyer never uses the home but re-sells it to a second buyer, may still owe a duty to that second buyer. This “loophole” is based on an actual case, Spivack v. Berks Ridge Corp., where the purchaser (and user) of a condominium unit purchased from a developer who had contracted with the builder. The ultimate purchaser/user was allowed to bring a warranty claim against the builder despite the intervening owner.
If you have a problem with a newly purchase home, our advice is to not go it alone. You may have a claim against your seller, or your home inspector, or even the builder. A lawyer may be able to help you.
— Rod Fluck