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Buyer Beware: Unimplied Warranty

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Now it becomes even more important to have a qualified real estate transactional attorney for your closings and experience litigation expert if issues arise post-closing.

The Illinois Supreme Court recently eliminated the consumer protection for homeowners seeking financial remedy against subcontractors for defective construction. On December 28, 2018, the Supreme Court found in Sienna Court Condominium Ass’n v. Champion Aluminum Corp. that a purchaser of a new home cannot sue a subcontractor that had no contractual relationship with the purchaser. This decision means that purchasers have to be extremely cautious when buying a new home and now have more reason to hire a lawyer than ever before.

While this decision affects purchasers of all new homes, it could have more severe financial consequences for associations of Chicago’s high-rise condominiums. Condominium boards have long struggled to recover damages from the original developer when they find construction defects years after construction is completed. This is because limited liability companies are created for each individual project and associations may have signed waivers at the time of purchase which limit their legal recourse.
Previously, homeowners were able to seek financial recovery from subcontractors under an implied-warranty-of-habitability theory when they were unable to recover from the builder-developer. After the Supreme Court’s ruling, however, the range of legal remedies for pursuing financial recovery is even more limited. Whatever legal recourse you might have as an owner under an implied-warranty-of-habitability theory does not apply to and against a subcontractor. Fixing defects in large construction projects could cost millions, and homeowners may now have to eat the costs while knowing they might not be able to recover from those responsible.

The Supreme Court’s decision forces individual purchasers to bear the burden of construction defects. As new houses are now, in a sense, mass produced, buyers are often purchasing houses based on a model home or pre-drawn plan. This means that buyers of newly constructed houses have little or no opportunity to inspect the construction. Purchasers also often do not have the experience or background knowledge necessary to evaluate construction of a new home. As homebuyers are thus unusually dependent on builder-vendors and their subcontractors, many courts have recognized the implied-warranty-of-habitability. However, the Illinois Supreme Court’s ruling allows subcontractors to escape responsibility if they have no contractual relationship with the purchaser. This decision serves to further disadvantage purchasers and increase the need for transactional and experienced real estate litigation attorneys.

If you are looking to buy a new home, take the steps necessary to protect yourself from future expenses by hiring a lawyer that will safeguard your interests in real estate transactions. If you have noticed construction defects after purchasing a new home, talk to a lawyer to evaluate what legal remedies you have for pursuing financial recovery. Contact the attorneys at Sherwood Law Group at 312-627-1650 or email at info@sherwoodlawgroup.com with any questions relating to legal matters. We are here to help!

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