Arizona Appeals Court Says Builder Cannot Waive State's Implied Warranties

When a new Arizona homeowner discovered construction defects in her newly built home—popped nails, flaws in the soil preparation, grading, and drainage—she took the builder to court. But the trial court tossed her case out, citing the contract that included waiving a workmanship and habitability warranty. The case reached the Arizona Court of Appeals, which ultimately decided builder Scott Homes Development Co. could not rightfully disclaim the implied warranty of workmanship and habitability, reports the Daily Independent. A lobbyist from the Home Builders Association of Central Arizona said it’s the first ruling of its kind saying sellers and buyers cannot waive the warranty rights they have under Arizona law. 

But Kamps, whose organization was not a party to the litigation, pointed out the implied warranty law is essentially a remedy for homebuyers created not by the legislature but instead by the Arizona Supreme Court. And he noted the appellate judges said that means they are bound by those precedents unless and until the top state court revisits the issue.

James Holland Jr. said his client Homes was not seeking to avoid being responsible for any issues, saying it recognizes it has an obligation to build quality homes.

"It just wants to define everyone's rights ahead of time to avoid disputes and misunderstandings,'' he said, something that can be done with a specific warranty, spelled out in print, versus a more generic implied warranty.

Holland said he has not yet discussed the prospect of an appeal with his client.

According to court records, Zambrano sued under the implied warranty law when she claimed construction defects including popped nails and defects affecting the home's foundation, such as soil preparation, grading and drainage.

The trial court tossed her lawsuit because she had waived her right to all implied warranties. But Gass said it's not that simple.

On one hand, he said, Arizona has a policy of allowing parties to enter into contracts without interference.

"Accordingly, Arizona courts decline to enforce a contract terms on public policy grounds only when the term is contrary to an otherwise identifiable public policy that clearly outweighs any interests in the term's enforcement,'' the judge wrote.

And that, Gass said is what is at issue here, saying this isn't a contract between two equally knowledgeable parties.

"Builders hold themselves out as skilled in the profession,'' he wrote.

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