Home › Latest News
It's the Law: Builder warranties can be limited by contract
More Latest News 
Share and Enjoy 
Q: I am buying a new home from a builder. The builder’s contract has language that states the only warranty provided is a one-year warranty on materials and workmanship. Can the builder do that?
A: The general rule under common law is that implied warranties do not apply to realty. Real estate purchases were governed by the rule of caveat emptor, which means “let the buyer beware.”
The rule of caveat emptor has eroded so that many states now recognize an implied warranty of fitness in cases involving sales of new houses by a builder. As explained by the Idaho Supreme Court, “to apply the rule of caveat emptor in favor of a builder who is daily engaged in the business of building and selling houses, is manifestly a denial of justice.”
The rationale underlying these decisions has been that the builder is best situated to make sure a new home is well-built and that materials utilized in the home are of good quality. Placing the burden on an unsophisticated purchaser to find defects in material or construction is unfair, especially where the property is most often the primary residence of the buyer.
Florida joined the growing number of states abolishing caveat emptor with respect to purchase of new homes in 1972, in the case of Gable v. Silver. In that case, a condominium purchaser sued the seller for damages and costs of repair of a defective air conditioning system. The appellate court ruled that an air conditioning system is an attached and immovable part of the real estate, so it is transformed into realty. The court went on to throw caveat emptor out in purchase of a new residential condominium, and by implication, a purchase of any new home.
For Floridians, this means that builder/sellers of new homes must now provide an implied warranty of fitness and habitability when selling residences to their initial purchasers.
By statute, developers of condominiums and cooperatives also grant to the purchaser of each condominium unit an implied warranty of fitness and merchantability. The statutory warranties are generally for a three-year period. There’s no comparable statute for other residential property.
Unfortunately for the consumer, Florida courts have held parties to a contract can limit or eliminate these warranties. Performance standards in the contractual home warranty must be clear as to the scope of any warranty provided by the builder/developer and the extent of disclaimer of the implied warranty. In one case, a condominium developer attempted to provide a limited one-year warranty to the purchaser. Because the developer did not disclaim the implied warranty, the contract warranty was held to be in addition to that provided by statute.
The implied warranty of fitness and merchantability means that the property will be reasonably fit for use as living quarters, meeting normal standards for what is reasonably expected of living quarters of comparable kind and quality. When a developer or builder attempts to limit that warranty, the buyer should be concerned. Prior to signing a contract with warranty-limiting language, a buyer should carefully review the contract with an experienced attorney.
Florida courts have agreed that the burden of defective construction should not be placed on a buyer. Close attention to contract language will ensure that this important right of a home purchaser is protected.
---
William G. Morris is a lawyer with offices at 247 N. Collier Blvd., Marco Island. The column is not intended to be legal advice for specific circumstances. General questions can be sent by e-mail to wgmorrislaw@earthlink.net or by fax to (239) 642-0722. Read other columns at http://www.wgmorris.com.
Comments
This site does not necessarily agree with comments posted below — responsibility lies with the relevant reader alone. Read our privacy policy & user agreement.
Post your comment
(Requires free registration.)