Following the construction industry and related legal topics in the United States.

Monday, August 25, 2008

Couple Runs Afoul with Implied Warranty of Habitability

A recent NC case arises from an Outer Banks construction lot in Duck, which according to an online resource on Duck is a town established in the 1870’s and named for the many ducks and water fowl in the area. A migratory town with around 500 full time residents, nearly a quarter million people flock there every summer.

Waddling through the tangled web of the case, Developer One built a bulkhead retaining wall around a lot fronting the Currituck Sound in Duck. Later, Mr./Mrs. Mancuso purchased the lot individually, and then had their company, Developer Two, build a house, swimming pool and second bulkhead. Buyers bought the house and less than a year later, Developer One’s first bulkhead sagged and bowed. Not wanting to pay the bill, Buyers filed suit against Mr./Mrs., but not their company Developer Two.

The North Carolina Court of Appeals reaffirmed that North Carolina recognizes a claim for breach of implied warranty of habitability against a "vendor" who is in the business of building dwellings. The implied warranty covers recently constructed dwellings, including all "fixtures," so they are sufficiently free from major structural defects and constructed in a workmanlike manner.

After ruling the bulkhead a "fixture" due to its "annexation to the land", the court needed to find that Mr./Mrs. are "vendors" to hold them liable. Since (1) Mr./Mrs. signed the contract as individuals, (2) Buyers did not know that Mr./Mrs. intended to contract the construction to a separate company, and (3) Mr./Mrs. were actively involved in the construction, the court ruled that Mr./Mrs. were out of luck and could not duck their implied warranty responsibilities by contracting with their own corporation. (This entry posted by Ken Michael, a member of Womble Carlyle’s real estate development and construction law practice group.)

Source: Regis M. Burek and wife, Lynda G. Burek v. Bernard Mancuso, Jr. and wife, Frances Mancuso, 657 S.E.2d 446, 2008 WL 565112 (N.C. App. 2008)


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