Supreme Judicial Court Protects New Home Buyers

by Thomas V. Bennett

The Legislature imposed gentrification in the rough and tumble world of commerce through the adoption of the Uniform Commercial Code in 1957 which imposes a certain code of conduct between business people and consumers and through M.G.L.A. c. 93A, the so-called "Mini FTC Act" which makes unfair and deceptive trade practices unlawful in the Commonwealth of Massachusetts adopted in 1967.
 

Against that backdrop of legislative conduct corrections, the laws dealing with the sale of real estate have been largely unchanged until now.
 

The Supreme Judicial Court in deciding a case of first impression,* held that the sale of a new home by a builder-vendor has an implied warranty of habitability, a concept that has been present in the Uniform Commercial Code, with respect to the sale of products, since its adoption.
 

The scope of the implied warranty of habitability that attaches to the sale of new homes by a builder-vendor is to be determined on a case-by-case basis as to whether or not the home is unsafe because it deviates from fundamental aspects of applicable building codes or is structurally unsound or fails to keep out elements because of defects in construction. The Court further found that the implied warranty of habitability is collateral to the covenant to convey and survives the passing of title and the taking of possession of real estate and it cannot be waived or disclaimed because to permit a disclaimer of the warranty protecting the purchaser from the consequences of latent defects would defeat the very purpose of the warranty.
 

At first blush this case may seem to cover basic flaws things like the plumbing not working; however, the suit, in fact, involved a home which had eleven fireplaces. The purchasers of the home had an express warranty but it expired after one year. The owners never used the fireplaces but found out, some three years after they had purchased the house, that the fireplaces were defective.
 

The Court surveyed cases of other jurisdictions in the country and determined there were a number of important policy considerations that had led other jurisdictions to adopt the type of implied warranty that the Court adopted in this case, including those policy considerations set forth in the Uniform Commercial Code. In order to establish a claim for breach of the implied warranty of habitability, a plaintiff would have to demonstrate that
 

1. they purchased a new home from the defendant builder-vendor;
2. the house contained a latent defect;
3. the defect manifested itself only after purchase;
4. the defect was caused by the builder's improper design, material or workmanship, and
5. the defect created a substantial question of safety or made the house unfit for human habitation.
 

In addition, the Court found that the claim must be made within the three-year statute of limitation and the six-year statute of repose set forth in M.G.L.A.c.260,§2B which provides, in pertinent part, that the action must be brought within three years next after the action accrues provided in no event should such actions be commenced more than six years after the earlier of the dates of (1) the opening of the improvement to use or (2) substantial completion of the improvement and the taking of possession for occupancy by the owner.
 

Since buying a simple appliance or electronic device carries warranties and implied warranties of merchantability, certainly this case is a major step for consumers whose home is generally the largest single purchase they will make in their lifetime.