In a prior post on November 19, 2012, I reported that the Superior Court of Pennsylvania held that the implied warranty of habitability extended to subsequent purchasers of residential properties. The Superior Court based its opinion on the foundation of public policy considerations flowing from the unequal bargaining power between developers/builders and residential home buyers.In its August 18, 2014, ruling, the Pennsylvania Supreme Court reversed that decision on the primary ground that public policy decisions are best left to the legislature.
By way of brief recap, the Plaintiffs in the case (Conway) did not purchase their home from Cutler. Instead, they purchased their home from another couple that previously bought the residence from Cutler. Approximately 2 years after moving in, the Conways noted water infiltration into their home and hired an expert to look into the issue. Suit was eventually brought against Cutler for latent defects that they alleged caused the water problem. The suit asserted a single claim for breach of the implied warranty of habitability.
After the trial court dismissed the case, the Superior Court decided that the implied warranty of habitability is based on public policy considerations that exist regardless of the existence of a contract. The sales transaction that initiates the warranty can often be a trigger, but it is not a requirement. Subsequent homeowners can still rely on the superior knowledge and expertise of builder regardless of whether they purchase the home directly from the builder or not.
The majority opinion of the Supreme Court noted that the cases relied upon by the Superior Court could be distinguished both factually and legally. Then, in the heart of its opinion, it reviewed the law in Pennsylvania and in other jurisdictions extensively. A split was noted in both the lower Courts of Pennsylvania and between the decisions of other states. Importantly, however, the Supreme Court noted that all of the decisions were made on public policy grounds.
Ultimately, the Supreme Court reversed the Superior Court on the basis that public policy decisions are best left to the General Assembly. The breach of an implied warranty of habitability presently relies on an underlying contract with the homebuilder in Pennsylvania. Because Courts are to be very circumspect about making public policy determinations, such a change to the implied warranty of habitability is more properly made through the legislative process. The Superior Court, it decided, had overreached.
This decision likely brings this issue to a close in the court system. It’s unclear whether the legislature will take this specific issue up, but it seems unlikely in the near future.