Previously, we reported on the Pennsylvania Superior Court’s decision in Conway v. Cutler Group where the implied warranty of habitability was extended to secondary home buyers suing original builders for, among other things, latent construction defects and faulty workmanship. In the interim, however, the Pennsylvania Supreme Court entertained further appeal on this case of first impression, and ultimately decided that implied warranties vest only in the original homeowner.
In the most recent iteration of Conway, the Supreme Court was called to opine on the narrow question of whether secondary homeowners have standing to sue for breach of the implied warranty of habitability that “protects those who purchase a newly constructed home from latent defects.” However, in the Court’s view, the question was really whether subsequent home owners can recover contract damages for breach of the warranty after the home had already been inhabited. Specifically, the Court noted that Pennsylvania’s lower courts had been deeply divided on the issue since at least 1972 with some jurists believing that the warranty passes through to subsequent buyers as a matter of equity and still others arguing that it arises out of a contract between the builder and buyer.
In reviewing the decision below, the Supreme Court noted that the Superior Court adopted the former view – that is, that public policy requires the implied warranty to follow the home, itself, and not merely the original purchaser. To this end, it appeared that the Superior Court relied on Spivak v. Berks Ridge Corp. where it had previously held that the warranty passed to a secondary buyer who purchased a newly constructed home from a developer that was a separate entity from the builder. In considering this precedent in connection with the question in Conway, however, the Supreme Court summarily rejected its application as overly broad and factually distinguishable. Instead, the Supreme Court explained that Pennsylvania law originally recognized the implied warranty of habitability as arising out of privity of contract between the purchaser and the builder or the plaintiff’s identity as the first “user-purchaser”. Consequently, the Supreme Court concluded that Pennsylvania law only allows secondary buyers to sue for breach of the implied warranties when either condition is present, and the warranties do not follow the sale of a previously-inhabited home.
To be sure, the Supreme Court’s decision in Conway is heartening for builders and contractors insofar as it limits the types of claims that can be pursued against them by subsequent home buyers. However, the Court’s discussion of the public policy reasons for the Superior Court’s position implicitly invites the Commonwealth Legislature to consider a statutory resolution to this issue. The possibility thus remains that any respite offered by Conway in Pennsylvania may ultimately lapse depending on the whims of the political realm.
Thanks to Adam Gomez for his contribution.