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A condominium association filed an implied warranty of habitability complaint against architects, engineers and material suppliers – asserting that they were responsible for certain defects in construction that rendered the condominium units uninhabitable. An Illinois appellate court affirmed the trial court’s dismissal of the case, holding that implied warranty of habitability claims cannot be made against design professionals that do not engage in the actual construction of the allegedly defective structure.

Quoting from an earlier case precedent, the court stated, “Engineers and design professionals… provide a service and do not warrant the accuracy of their plans and specifications.” This is so even where the project developer is bankrupt and the condo association has not recourse for recovery due to that insolvency.   Likewise, where material suppliers did no construction work but only supplied materials for the project, they are not subject to liability for breach of an implied warranty of habitability liability. Sienna Court Condominium Association v. Champion Aluminum Corporation, et. al., 75 N.E. 3d 260 (Illinois 2017).

The court relied heavily upon an appellate court decision in Board of Managers of Park Point at Wheeling Condominium Association v. Park Point at Wheeling, LLC, 48 N.E. 3d 1250 (2015). In doing so, the court reiterated that it was rejecting the plaintiff’s argument that the court should expand the extent of the implied warranty of habitability to a new class of defendants who designed, but were not involved in the actual construction, of the condominiums at issue. The court stated, “It is clear that liability is limited to parties who actually ‘took part in the construction or construction–sale.’” The court likewise reiterated that, “owners have no breach of implied warranty action against a mere material supplier….”

Construction Subcontractor Potential Liability

Construction subcontractors in this same case, however, were held to be subject to potential responsibility for implied warranty of habitability claims where the developer or general contractor has become insolvent. The court found that “insolvency is the determinative factor.” It didn’t matter that the plaintiff might have other recourse to recover damages possibly from the insurance carriers of the developer or general contractor.

Potential recovery from insurance policies of an insolvent developer or builder does not preclude the implied warranty of habitability claim. Nor does potential recovery from an insolvent developer’s “warranty fund” bar the potential cause of action.

 

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 19, No. 11 (Dec 2017).

Copyright 2017, ConstructionRisk, LLC