Speight v. Walters Development Co., Ltd.
744 N.W.2d 108 (2008)
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Rule of Law:
The implied warranty of workmanlike construction extends from a builder-vendor to subsequent purchasers of a home who lack privity of contract with the builder. The statute of limitations for a claim of breach of this warranty begins when the subsequent purchaser discovers or reasonably should have discovered the latent defect.
Facts:
- In 1995, Walters Development Company, Ltd. constructed a custom home for the original buyers, the Roches.
- The Roches subsequently sold the home to another party, the Rogers.
- On August 1, 2000, the Rogers sold the home to Robert and Beverly Speight.
- After purchasing the home, the Speights discovered water damage and mold.
- A building inspector determined that the damage was caused by a defectively constructed roof and rain gutters, which were latent defects from the original construction.
- The record indicated that none of the previous owners had actual or imputed knowledge of these defects.
Procedural Posture:
- Robert and Beverly Speight sued Walters Development Company, Ltd. in an Iowa district court (court of first instance) for breach of implied warranty of workmanlike construction and negligence.
- The district court granted summary judgment for Walters Development, holding that the implied warranty did not extend to remote purchasers and that the claim was barred by the statute of limitations.
- The Speights, as appellants, appealed the ruling to the Iowa Court of Appeals.
- The Court of Appeals affirmed the district court's judgment.
- The Speights appealed to the Supreme Court of Iowa.
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Issue:
Does the implied warranty of workmanlike construction extend to a subsequent purchaser of a home, allowing them to sue the original builder for latent defects discovered after the purchase?
Opinions:
Majority - Larson, Justice.
Yes. The implied warranty of workmanlike construction extends to subsequent purchasers. The court reasoned that the public policy justifications for protecting the first buyer from latent defects—such as the buyer's lack of expertise and the inability to discover hidden flaws—apply with equal force to subsequent purchasers. Rejecting the traditional requirement of privity of contract, the court noted that it had already been eliminated in analogous products liability cases and that the warranty attaches to the quality of the construction itself, not the status of the purchaser. The court also held that extending this warranty does not expose builders to unlimited liability, as claims are still subject to Iowa's 15-year statute of repose, which runs from the completion of construction.
Analysis:
This decision significantly expands builder liability in Iowa by extending the implied warranty of workmanlike construction to subsequent purchasers, aligning the state with a modern trend in property law. By eliminating the privity requirement for this cause of action, the court prioritizes consumer protection over traditional contract doctrine, holding builders accountable for latent defects that may not manifest for years. This ruling clarifies that a builder's liability is not indefinite but is ultimately capped by the state's 15-year statute of repose, balancing the protection of homeowners with the need for commercial finality for builders.
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