Iowa Home Builder Liability Expands Under Iowa Ruling
Home builders in Iowa recently received a ruling from the Iowa Supreme Court that significantly expands their liability. The Court ruled in the case of Speight v. Walters Development Company, Ltd. that a home builder can be held responsible under a theory of implied warranty of workmanship construction to third party purchasers.
What does that mean? It used to be the law in Iowa of caveat emptor, or "buyer beware". That meant that a home buyer should thoroughly inspect the house they were buying and find any defects, because after they bought it, it was too bad if there was something wrong with it. Eventually, in 1985, the Iowa Supreme Court expanded builder liability by requiring that a building be constructed in a reasonably good workmanlike manner and reasonably fit for the intended purpose. This "implied warranty" was only applied to the first owner of the house. Thus, if a house was defectively built, only the person buying it from the builder could bring a lawsuit against the builder.
This February 1, 2008 ruling takes the next step and holds a builder responsible to subsequent owners for defective conditions. In Speight, the house was built in 1995 by Walters Development and sold to Roche, who then sold it Rogers, who then sold it to the Speights on August 1, 2000. After purchasing the house, the Speights noticed water damage and mold that were a result of a defectively constructed roof and defective rain gutters. Speights brought suit against Walters, lost at the trial court level and lost on appeal to the Iowa Court of Appeals until the Iowa Supreme Court reversed the ruling and changed Iowa law.
The Court noted that pubic policy justifications support further erosion of the doctrine of caveat emptor. The purpose of the rule is to ensure that innocent home buyers are protected from latent defects. Subsequent purchasers are in no better position to discover those defects than the original purchaser. "Builders should be accountable for their work" quoted the court.
While whether this will crowd the courthouse with lawsuits on defective houses is yet to be seen, it certainly expands a builder's liability for the houses they build.
