implied warranty of quality and fitness
The ordinary ‘consumer’ can determine little about the soundness of the construction but must rely upon the fact that the vendor-builder holds the structure out to the public as fit for use as a residence, and of being of reasonable quality
Defendant must be a builder-vendor. See below.
Implied warranty in new house construction
Mobley v. Copeland
828 S.W.2d 717
Mo.App. S.D. 1992.*728 III, which alleged a breach of an implied warranty of habitability, a theory of recovery first recognized by the Missouri Supreme Court in Smith v. Old Warson Development Co., 479 S.W.2d 795 (Mo. banc 1972). [FN10] In Old Warson, the court announced a limited departure from a strict application of the doctrine of caveat emptor and held that a common law warranty of habitability to protect against latent structural defects will be implied in law in favor of the first purchaser of a new home from a builder-vendor. Old Warson, 479 S.W.2d at 796 and 801; O'Dell, 560 S.W.2d at 870.
FN10. In the Old Warson opinion, the words fitness, quality, merchantability, and habitability are used interchangeably. The warranty imposed in Old Warson is analogous to the implied warranty of merchantability found in the Uniform Commercial Code (RSMo § 400.2- 314). O'Dell v. Custom Builders Corp., 560 S.W.2d 862, 870 (Mo. banc 1978). In other words, for purposes of Old Warson, habitability is to new homes what merchantability is to goods. Id. at 870-71. See also Karen Lee Schneider, Comment, Recent Developments in Implied Warranty Actions for the Sale of New Homes, 50 Mo.L.Rev. 377, 385-86 (1985).
We need not analyze each problem to determine whether it constituted a structural defect as that term is used in, for example, San Luis Trails Ass'n v. E.M. Harris Bldg. Co., 706 S.W.2d 65, 68-69 (Mo.App.1986), and Schulze v. C & H Builders, 761 S.W.2d 219, 222-23 (Mo.App.1988). Nor must we deal with the plaintiff's argument that the house, which the defendants used as their residence for 12 years, was "new" as that term was construed in Snowden v. Gaynor, 710 S.W.2d 481, 485-86 (Mo.App.1986) ("Several months" elapsed from the time the house was completed until it was sold, and the house was occupied during the winter while it sat unsold.).
Old Warson in which the supreme court made clear the implied warranty of habitability would be "applicable only against that person who not only had an opportunity to observe but failed to correct a structural defect, which, in turn, became latent, i.e., the builder-vendor." 479 S.W.2d at 801.
In Allison v. Home Savings Ass'n of Kansas City, 643 S.W.2d 847 (Mo.App.1982), the court was faced with the issue of whether a lending institution might be charged with liability as a builder-vendor under the Old Warson doctrine. The court pointed out there was no evidence about the lending institution's involvement in the pre-construction phase of the project other than financing and no evidence of its "opportunity to observe or actual knowledge of construction defects." 643 S.W.2d at 851. The court held that, on the record before it, the lending institution could not be liable for damages on the theory of a breach of an implied warranty of habitability. Id.
Had the evidence about the lending institution's involvement in the project been otherwise, the result in Allison might have been different. As the court noted:
Of course a defendant need not personally perform the actual construction in order to be held liable. A developer who causes houses to be built for the purpose of sale to the public will be held to be a builder-vendor, since purchasers from a developer-vendor depend on his ability to hire a general contractor capable of constructing a sound residence.
643 S.W.2d at 851 n. 1.