ARTICLE
7 January 2019

Homebuyers' Implied Warranty Of Habitability Suit Against Subcontractors Is Frozen Out By Illinois Supreme Court

OD
Ogletree, Deakins, Nash, Smoak & Stewart
Contributor
Ogletree Deakins is a labor and employment law firm representing management in all types of employment-related legal matters. Ogletree Deakins has more than 850 attorneys located in 53 offices across the United States and in Europe, Canada, and Mexico. The firm represents a range of clients, from small businesses to Fortune 50 companies.
Overruling 35 years of precedent, the Illinois Supreme Court has held that buyers of newly constructed homes cannot sue subcontractors for breach of the implied warranty of habitability.
United States Real Estate and Construction
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Overruling 35 years of precedent, the Illinois Supreme Court has held that buyers of newly constructed homes cannot sue subcontractors for breach of the implied warranty of habitability. Sienna Court Condominium Association v. Champion Aluminum Corporation, 2018 IL 122022 (December 28, 2018).

The case involved condominium purchasers who sought recovery for construction defects from the original developer (which sold them the units), the original general contractor, and several of the original subcontractors.

The Illinois Supreme Court concluded that there is not an implied warranty of habitability right against a subcontractor when the damages are only "economic," i.e., commercial losses which do not result from bodily injury or property damage.

The Sienna Court decision does not negate an implied warranty of habitability theory entirely. It just limits such causes of action to parties with direct contractual relationships while still allowing subsequent purchasers to pursue warranty theories against original developers.

The Sienna Court ruling reaffirms the Illinois construction-law principle that legal theories arising from or related to contracts—such as an implied warranty of habitability—may be pursued between parties to that contract only. In doing so, it also affirms Moorman Manufacturing Co. and overrules Minton, lower-court precedent that had stood for 35 years.

Ultimately, this means that homebuyers will have recourse against only the entity with which they have a contract—whether a developer or a general contractor—when their only loss is economic. Contractors and subcontractors outside the seller-buyer relationship can now breathe easier.

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.

ARTICLE
7 January 2019

Homebuyers' Implied Warranty Of Habitability Suit Against Subcontractors Is Frozen Out By Illinois Supreme Court

United States Real Estate and Construction
Contributor
Ogletree Deakins is a labor and employment law firm representing management in all types of employment-related legal matters. Ogletree Deakins has more than 850 attorneys located in 53 offices across the United States and in Europe, Canada, and Mexico. The firm represents a range of clients, from small businesses to Fortune 50 companies.
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