PHOENIX — Homebuilders can’t escape their legal responsibility to create “habitable’’ houses by instead giving buyers a different kind of warranty, the state Court of Appeals has ruled.
The judges acknowledged Tina Zambrano, a homebuyer, signed an agreement with Scott Homes Development Co. that provided for a “limited warranty’’ on the property.
That document said the warranty “is the only warranty applicable to the purchase of the property.’’ And it said that she, as the buyer, “waived any right to any other express or implied warranties dealing with things like habitability and workmanship.’’
But Judge David Gass, writing for the three-judge panel, said her signature on that document is irrelevant.
“A new home buyer cannot waive — and a builder cannot disclaim — the implied warranty of workmanship and habitability,’’ he wrote. “This prohibition precludes a waiver even when, as here, the building gives an express warranty in consideration for the waiver.’’
Gass said public policy supporting the idea of an implied warranty outweighs any argument about the freedom to contract.
This is the first court ruling of its kind saying that sellers and buyers cannot waive the warranty rights they have under Arizona law by providing something else, said Spencer Kamps, lobbyist for the Home Builders Association of Central Arizona.
Kamps, whose organization was not a party to the litigation, pointed out that the implied warranty law is essentially a remedy for homebuyers created not by the Legislature but instead by the Arizona Supreme Court. And he noted the appellate judges said that means they are bound by those precedents unless and until the top state court revisits the issue.
Attorney James Holland Jr. said his client Scott Homes was not seeking to avoid being responsible for any issues, and that it recognizes it has an obligation to build quality homes.
“It just wants to define everyone’s rights ahead of time to avoid disputes and misunderstandings,’’ he said, something that can be done with a specific warranty, spelled out in print, versus a more generic implied warranty.
Holland said he has not yet discussed the prospect of an appeal with his client.
According to court records, Zambrano sued under the implied warranty law, claiming construction defects including popped nails and defects affecting the home’s foundation, such as soil preparation, grading and drainage.
The trial court tossed her lawsuit because she had waived her right to all implied warranties. But Gass said it’s not that simple.
On one hand, he said, Arizona has a policy of allowing parties to enter into contracts without interference.
But he said the contract at issue here isn’t one between two equally knowledgeable parties.
“Builders hold themselves out as skilled in the profession,’’ he wrote. “Modern construction is complex and regulated by many governmental codes. Home buyers are generally not skilled or knowledgeable in construction, plumbing or electrical requirements and practices.’’
The judge acknowledged that some states do allow homebuyers to waive their rights under implied warranties.
But he and his colleagues sided with other states that rejected this trend after concluding the whole purpose of the implied warranty is to protect a homeowner from defects that may be hidden or not appear obvious at the time of the sale.
