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Utah Supreme Court Recognizes Implied Warranty for New Home Buyers

On Behalf of | Oct 27, 2010 | Real Estate Law |

By Lewis P. Reece, Shareholder–Every residential developer, new home builder and new home buyer in Utah and any real estate agent or lawyer involved in the real estate market should be aware of the case of Davencourt at Pilgrims Landing Homeowners Assoc. v. Davencourt at Pilgrims Landing, LC, 2009 Utah 65, 221 P.3d 234.   In Davencourt, the Utah Supreme Court modified Utah’s long standing rule of caveat emptor or buyer beware when purchasing a new home.   The Court went through an in depth survey around the country and found that only Utah had no home warranty of any kind implied in the purchase contract for a new home.   In Davencourt, the Utah Supreme Court changed that.

Citing policy reasons and arguing that this was part of the common law and thus constitutionally appropriate for the judiciary, the Utah Supreme Court found that an implied warranty of workmanship and habitability exists for all new home construction in Utah.    The implied warranty is not a guarantee that the home is built without defect.  Neither does the implied warranty apply to aesthetic deficiencies of the home.  But each new home buyer is entitled to a home free of latent defects that go to the home’s workmanship and habitability.  The Court said:

The implied warranty, however, does not require perfection on the part of the builder-vendor/developer-vendor or “make them an insurer against any and all defects in a home.”  “No house is built without defects,” and the implied warranty does not “protect against mere defects in workmanship, minor or procedural violations of the applicable building codes, or defects that are trivial or aesthetic.”  Nor is the implied warranty intended to alleviate purchasers of their due diligence and opportunity to inspect a residential construction or the incentive to negotiate for express warranties.

Therefore, to establish a breach of the implied warranty of workmanlike manner or habitability under Utah law, a plaintiff must show (1) the purchase of a new residence from a defendant builder-vendor/developer-vendor; (2) the residence contained a latent defect; (3) the defect manifested itself after purchase; (4) the defect was caused by improper design, material or workmanship; and (5) the defect created a question of safety or made the house unfit for human habitation.

Davencourt, 2009 UT 65, ¶¶ 59, 60 (citations omitted).

This implied warranty is narrow, but it is imposed by law.  It is implied in each contract for the purchase of a new home.  Thus, it requires that the new home buyer have a contract with the builder or developer of the new home.   It does not arise under tort law but under contract law, and the plaintiff must have privity of contract to bring the claim.  Id. at ¶ 57.  Moreover, the builder or developer cannot waive this warranty by contract.  Neither does the warranty disappear when the buyer receives his deed.  The warranty survives conveyance and is not merged into the deed.  Id. at ¶ 58.   And the implied warranty is for new home construction only.  The doctrine of caveat emptor is alive and well in Utah as it relates to homes that are not new.  “Finally, we emphasize that this implied warranty does not abrogate the doctrine of caveat emptor in the sale of existing or used residences.” Id. at ¶ 62.

Davencourt is an important case in the common law of Utah and for those dealing in the new home market.