Court Sides with Contractor in HOA Court Case

This case involved an action brought by a condominium owners association (“Association”) against the general contractor (“Contractor”) who constructed the development of the condominiums, and a plumbing subcontractor (“Subcontractor”) who worked on the project. Association brought the action as the successor to the developer of the project, who ceased doing business and dissolved in or about 2011 after all the units were sold and Association took over the management and administration of the property.

In its lawsuit, Association alleged that in mid-2013 it learned of leaks in a hot water supply riser that serviced a building. In investigating the incident, Association learned of latent defects in the design, materials, and construction of the building’s plumbing riser system. Association further alleged that the defects required repairs that Contractor refused to investigate and remediate, which then forced Association to incur the cost of the repairs—which exceeded $1,000,000. In its action, Association alleged claims for breach of an implied warranty of habitability against Contractor and Subcontractor, and breach of contract against Contractor. The trial court granted a motion to dismiss the action based on a finding that there was no “privity of contract” between Association and Contractor / Subcontractor. Association then appealed the trial court’s decision.

The appellate court stated that the purpose of a claim for damages based on a claim of breach of the implied warranty of habitability is to protect homeowners from latent defects that affect the habitability of their homes. The “implied warranty” is: