United States: Waivers Of Implied Warranty Strengthened For Condo, Home Builders In Illinois

In two recent builder-friendly decisions, the First District and Supreme Court of Illinois have ruled that the standard conspicuous waiver of the implied warranty of habitability found in most builders' sales agreements: 1) is effective even where not verbally "called-out" to or initialed by the buyer; and 2) binds both the buyer of a new home and all subsequent purchasers of the home.

For nearly 40 years, every sale contract from a builder-vendor to the first purchaser of a new house or condo in Illinois contains an implied warranty that the house will be free from latent defects that unreasonably interfere with its intended use. Petersen v. Hubschman Construction Co., 76 Ill. 2d 31 (1979). The purchaser may waive this implied warranty of habitability if certain conditions are met. As a result, most home and condo builder-vendors use standard sales contracts that waive the implied warranty and replace it with a one-year express limited warranty. 

Not surprisingly, these waivers have frequently been attacked by purchasers seeking the protection of the implied warranty. The resulting court decisions have created some uncertainty regarding both the legal requirements that must be met for a waiver to be effective and, if effective, the level of protection a waiver affords a builder-vendor. Two recent First District and Supreme Court of Illinois rulings, described below, have eliminated this uncertainty and validated the tried-and-true practice of using waivers of implied warranties of habitability.

Board of Managers of Park Point v. Park Point at Wheeling, LLC, 2015 IL App (1st) 123452 (December 31, 2015)

The First District has recently clarified the requirements for an effective waiver of an implied warranty of habitability originally laid out in Petersen. In Illinois, the waivers of the implied warranty of habitability that are ubiquitous in contracts to sell new homes and condominiums are effective if they are a conspicuous part of the contract, refer to the warranty by name, and use plain language that fully discloses the consequences of their inclusion. Petersen, 76 Ill. 2d at 43, 389 N.E.2d at 1159.

In the years following the Supreme Court's ruling in Petersen, several Illinois appellate court decisions have at least arguably required that builder-vendors both verbally "call-out" the waiver provision to the buyer and have the buyer initial next to the waiver. See, e.g., Board of Managers of Chestnut Hills Condominium Ass'n v. Pasquinelli, Inc., 354 Ill. App. 3d 749, 822 (2004). As a result, based on Chestnut Hills, many builder-vendors have required home buyers to initial the waivers of implied warranty of habitability found in their sales agreements.

In Board of Managers of Park Point v. Park Point at Wheeling, LLC, the First District Appellate Court clarified the requirements regarding waivers holding: 1) a builder-vendor is not required to verbally call the warranty waiver to each buyer's attention; or 2) obtain each buyer's initials next to it. Thus, the court specifically held that the Chestnut Hills court "was not attempting to enhance the Petersen criteria" with an initials requirement.

The Park Point decision is significant in that, at least in the First District, builder-vendors relying on a waiver to cut off claims under the implied warranty of habitability need not incur the time, expense and potential difficulty of proving certain facts. For example, a builder-vendor need not prove that it verbally called out waivers to each and every purchaser in a condominium building.  Nor does it have to prove that buyers actually initialed next to the waiver language. Obviously, this makes it much easier and less costly for a builder-vendor to enforce a waiver in the event that a buyer (or group of buyers) attempts to assert a claim under the implied warranty of habitability.

Fatah v. Bim, 2016 IL 119365 (May 19, 2016)

Three years after Petersen, the Supreme Court of Illinois held that where there was no waiver of the implied warranty of habitability by the first purchaser of a house and that the warranty is extended to a second purchaser of the house. Redarowicz v. Ohlendorf, 92 Ill. 2d 171 (1982). In Fatah v. Bim, the Supreme Court finally addressed a key question left unanswered by Redarowicz – whether an implied warranty of habitability waived by the first purchaser is, nonetheless, extended to a second purchaser.

This open question became particularly important when, in 2015, the First District Appellate Court held that the second purchaser of a home could assert claims under the implied warranty of habitability even where the original purchaser had validly waived the implied warranty in its purchase agreement with the builder-vendor. It reached this conclusion by holding that under Redarowicz, the implied warranty automatically extended to the second purchaser and that so long as the second purchaser did not execute a waiver of the implied warranty, it was alive and enforceable.

In Fatah, the Supreme Court reversed this decision and held that the implied warranty of habitability may not be extended to a second purchaser of a house when a valid, bargained-for waiver of the warranty has been executed between the builder-vendor and the first purchaser.  The court found that it would be unreasonable for a builder to have to perform under an express warranty that replaced the implied warranty that was waived and, then, subsequently be forced to perform under the implied warranty asserted by a second purchaser. 

Significantly, the Supreme Court recognized that affirming the appellate court would have the effect of eliminating the standard industry practice of the last 40 years, which is for builder-vendors to replace the implied warranty of habitability with an express warranty. Accordingly, the court's decision can be seen as re-affirming its support for this now standard practice that it originally authorized Petersen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions