If you’re purchasing a newly constructed home, a recent case out of the Pennsylvania Superior Court signals that you better take a good look at your contract with the builder. The case, Streiner v. Baker Residential of Pennsylvania, involves the following facts. Patricia Streiner executed a sales agreement for the purchase of a newly constructed home built by Baker Residential of Pennsylvania, LLC, in July of 2003. In 2013, Ms. Streiner brought suit in the Chester County Court of Common Pleas alleging that the home contained structural defects that allowed for water intrusion that caused $90,000 in property damage. In her lawsuit, Ms. Streiner (as Plaintiff) asserted claims for violation of the implied warranty of habitability, as well as claims for negligent misrepresentation and breach of the implied warranty of merchantability, and fitness for a particular purpose.
The law in Pennsylvania is clear: there is an implied warranty of habitability in new home contracts. However, this case made it very clear that the warranty may be waived. In fact, the Court went so far as to state that an effective waiver provision (one in which the language is clear and unambiguous) combined with an integration clause is a powerful impediment available to builders of new homes to defeat a plaintiff’s claim for breach of implied warranties at the pre-trial stage.
In the time leading up to trial, Baker Residential (as Defendant) sought summary judgment on all claims relying upon the language of the parties “new home contract.” The notable provision was found at paragraph 21 and stated: “All warranty provisions are set forth in the customer care manual delivered to [Streiner] prior to execution of this agreement… All other express or implied warranties are excluded, including specifically any implied warranties of merchantability, fitness for a particular purpose, reasonable workmanship, or habitability.”
Relying on this language, the Court ruled in favor of the Defendant and granted Baker Residential’s motion for summary judgment. On appeal, the following lesson was imparted by the Honorable Judge Correale F. Stevens: “The parties’ written contract makes plain that no implied warranty applied to the home,” Justice Stevens wrote for the panel. “Accordingly, the parole evidence rule bars Appellant’s attempt to avoid the disclaimer…”
Although this case is deemed “non-precedential,” meaning it should be used prudently (if at all) in official documents filed with the Court, it provides several important lessons. First, if you’re a home builder, this case law indicates that you can waive implied warranties which would otherwise apply provided you do so in a clear and unambiguous fashion. What does clear and unambiguous mean? It should be written in easily understood language which leaves out the likely potential for misinterpretation. It’s prudent to have an attorney prepare the provision initially for your incorporation in your agreements, and then to periodically review the language of your contracts with your attorney and modify if necessary. You also want to be sure you can satisfy to the Court that you made the language as visible and obvious as possible, SUCH AS BY PROVIDING THE WAIVER IN ALL CAPS AND BOLDED! It should also be noted as food for thought, and as an additional avenue for maximizing your protection as a home builder when you include a warranty waiver, that Baker Residential provided Streiner a ten (10) year home-warranty in the place of the otherwise implied warranties waived in the contract.
If you’re the purchaser, prior to settlement you should have an attorney review your contract to ensure you’re not relinquishing your rights to recovery at a later date or at least explain to you the effects of the builder’s inclusion of certain language. This is arguably the largest decision and purchase of your life, such that now is not the time to cut corners. As the home purchaser, it is critical you perform your due diligence with the help of agents who specialize in those fields (like real estate agents and attorneys).
Whether you’re a builder or buyer of a new home, the attorneys at Howland Hess O’Connell are available today to craft and/or review the contracts governing your arrangement. Although likely an obvious statement, it bears emphasizing that whether you’re the buyer or builder, your contracts should be reviewed by an attorney prior to anyone’s signature being placed on the document.
Legal Disclaimer: The contents of this website are intended solely for informational purposes. They neither constitute nor imply an official legal opinion on behalf of Howland, Hess, Guinan, Torpey, Cassidy and O’Connell nor do they establish an attorney-client relationship of any kind. Howland Hess O’Connell encourages all readers to seek and consult professional counsel before acting upon the information contained on this site.