Construction Defects: Elements of a Breach of Implied Warranties

Arizona recognizes implied warranties during a construction project. There may also be express warranties stated in the construction contract, but the implied warranties are present regardless of whether they are mentioned in the contract. Generally, they cannot be waived by the property owner in the contract.

Implied Warranties of Workmanship and Habitability

Under Arizona law, a contractor must complete their work in a “workmanlike manner”. This can be judged based on the standard of a reasonable worker of average skill and intelligence. The warranty of habitability requires that a building be reasonably suited for its intended use.

The purpose of these warranties is to protect the consumer, particularly those who do not have much knowledge about construction projects. Construction projects are complex and consumers will often be unaware of whether a project is being completed properly. The implied warranties protect consumers by requiring all contractors to be responsible for meeting a minimum standard of professionalism.

To prove a claim for breach of implied warranties, the property owner will first have to show that the warranty applies. Contractors and developers who are actively involved in a project will be considered to imply this warranty, but developers who merely finance the project and hire a contractor to do the work will not.

The property owner will then have to show that the implied warranty was breached. Typically, testimony from an expert in construction will be used to show what a reasonably skilled worker should have done in a particular situation.

If a breach occurred, the property owner must then show that it caused damages, usually equal to the cost of repairing the defect.

It is important to note that in Arizona a breach of implied warranty claim extends to subsequent purchasers of the property under Lofts at Fillmore Condominium Ass’n v. Reliance Commercial Const., Inc., 218 Ariz. 574, 190 P.3d 733 (2008). Even though a subsequent purchaser has no direct relationship with the original builder, the implied warranties still apply.

Assuming there was a written construction contract, the statute of limitations in implied warranty cases is six years.  It may not begin to run until the owner knows or reasonably should know of the defect. However, a statute of repose likely applies that bars claims after eight years, nine in some circumstances, regardless of when discovered.

Before filing a suit over a breach of implied warranties, a property owner should consult with a real estate attorney. Compliance with Arizona’s Right to Repair law may be necessary before filing a claim.

Chernoff Law handles business and real estate litigation matters, including construction defect and breach of implied warranty claims. Contact us to discuss your case with an experienced real estate attorney.