Illinois Supreme Court Denies Homeowner Implied Warranty of Habitability Claims Against Subcontracto

Overruling the 35 year old decision of the First District Appellate Court in Minton v. Richards, 116 Ill.App.3d 852, 452 N.E.2d 835, 72 Ill.Dec. 582 (1st Dist. 1983), the Illinois Supreme Court ruled December 28, 2018 that subcontractors have no liability to new home purchasers under the court created doctrine of implied warranty of habitability for newly constructed homes. Sienna Court Condo. Ass’n v. Champion Aluminum Corp, 2018 Ill. 122022 (2018). Although some Appellate Court decisions have held that new home buyers could recover from subcontractors when the general contractor was bankrupt or otherwise insolvent, the Supreme Court opinion clearly limits the applicability of the implied warranty of habitability to only those persons or entities who entered into contracts directly with the home buyer.

In the Sienna Court lawsuit, both the condo developer and its general contractor were in bankruptcy, and the unit buyers sought damages from certain subcontractors and material suppliers for water penetration into their units. The Appellate Court, ruling on certified questions from the Cook County Circuit Court, the Appellate Court held that the implied warranty liability extended to subcontractors where no effective remedy was available against the home seller and general contractor due to their bankruptcy, despite the lack of privity between the buyers and the subcontractors. Six of the Court’s seven justices concurred in an opinion overruling Minton on the grounds that the implied warranty of habitability is a contract claim, and can be pursued only against parties with which the new home purchaser is in direct privity of contract.