Iowa Supreme Court Extends Implied Warranty of Workmanlike Construction to Subsequent Homebuyers

The Iowa Supreme Court recently held that a subsequent buyer of a home could recover from the home builder for defective construction under an implied warranty of workmanlike construction in the case of Speight v. Walters Development Co., Ltd., 744 N.W.2d 108 (Iowa 2008). The facts revealed that a newly constructed home was sold to the original buyer in 1995. The home was subsequently sold twice, with the plaintiffs purchasing the home on August 1, 2000. Sometime after purchasing the home they noticed water damage and mold which a building inspector determined was the result of a defectively constructed roof and defective rain gutters. The homeowners filed suit against the home builder on May 23, 2005 alleging a breach of the implied warranty of workmanlike construction. The implied warranty of workmanlike construction is designed to protect an innocent home buyer by holding the experienced homebuilder accountable for the quality of construction. This warranty "addresses the inequities between the buyer and the homebuilder-seller by requiring that a building be constructed in a reasonably good and workmanlike manner and . . . be reasonably fit for the intended purpose." Speight, 744 N.W.2d at 111. To successfully make a claim under the implied warranty of workmanlike construction, the homebuyer must show: (1) the house was constructed to be occupied by the buyer as a home; (2) the home was purchased from the builder-vendor, who had constructed it for the purpose of sale; (3) when sold, the house had not been constructed in a good or workmanlike manner; (4) that at the time of purchase, the buyer was unaware of the defect and had no reasonable means of discovering it; and (5) by reason of the defective condition the homebuyer suffered damage. Id. at 111, 114. In extending this warranty to subsequent buyers, the Iowa Supreme Court determined that where a builder already was required to warrant that a home was constructed in a workmanlike manner to the initial buyer, it would be inequitable to allow an original buyer to recover while simultaneously prohibiting a subsequent buyer from recovering for latent, i.e. hidden defects in homes that are the same age. There are two primary limitations on recovery under this warranty. First, Iowa has a 15-year statute of repose which begins to run upon completion of the construction of the building. Second, a claim must be brought within five years of the buyer's discovery of the defect. In short, Iowa will allow any homebuyer to bring a claim under an implied warranty of workmanlike construction as long as the claim is brought within 15-years of the construction of the home and within 5-years of when the buyer has, or should have, knowledge of facts that would support his/her claim. Nebraska, along with 18 other states, already allowed subsequent buyers to bring this kind of claim. This rule, however, is contrary to other jurisdictions, including Kansas and Missouri.