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Arizona courts have long recognized that, as to new home construction, the builder-vendor impliedly warrants that the construction was done in a workmanlike manner and that the structure is habitable. A claim for breach of the implied warranty sounds in contract. As a general rule, only the parties and privies to a contract may enforce it. However, the Supreme Court of Arizona has held that suit on the implied warranty of workmanship and habitability may be brought not only by the original buyer of a home but also by subsequent buyers.
Defendant developer contracted with the builder to convert a building into condominiums. The developer later sold condominium units to individual buyers, who formed the condominium association. Based upon numerous construction defects, the condominium association filed suit against the developer and the builder for breach of the implied warranty of workmanship and habitability. The superior court granted summary judgment, ruling that the absence of contractual privity barred the claim. The condominium association appealed, but the Arizona Court of Appeals affirmed the superior court's grant of summary judgment. The condominium association sought further review.
Did the absence of contractual privity bar the plaintiff’s cause of action?
On review of the superior court and appellate court rulings, the state supreme court held that, although the builder was not the seller of the condominiums, it could nevertheless be sued by the condominium association for breach of the implied warranty of workmanship and habitability, and the absence of contractual privity did not bar the cause of action. The purpose of the implied warranty of good workmanship and habitability given in connection with new home construction was to protect innocent purchasers and to hold builders accountable for their work, and the implied warranty arose from the construction of a new home whether or not the builder was also the seller of that home.