For over 30 years, since Minton v. Richards Group of Chicago, 116 Ill.App.3d 852 (1st Dist. 1983), subcontractors in Illinois have been potentially liable to homeowners for breach of the implied warranty of habitability even though there was no contract between the subcontractor and owner. The implied warranty of habitability is a judicially created doctrine used to protect residential homeowners and buyers from construction latent defects that interfere with the habitability of their home. Specifically, this implied warranty was created to protect an innocent homeowner’s expectations of a defect free property by holding a contractor or its subs accountable for latent defects that made the premises uninhabitable.
That all changed on December 28, 2018. In Sienna Court Condominium Ass’n v. Champion Aluminum Corp., 2018 IL 122022, the Illinois Supreme Court set aside over thirty years of established law and held that the implied warranty of habitability does not apply to a subcontractor unless it has a direct contractual relationship with the homeowner or buyer.
Sienna Court was a dispute regarding the habitability of a two-building 111 residential unit development located in Evanston, Illinois. The units and common areas in the building contained several latent defects that affected the habitability of the units and common areas. The condominium association filed suit against several parties including subcontractors, for breach of the implied warranty of habitability. The condominium association did not have a direct contractual relationship with the subcontractors. The trial and appellate courts allowed the lawsuit to proceed on this theory of liability following Illinois law under the Minton case.
On appeal, the Illinois Supreme Court ruled that the implied warranty of habitability had its genesis in contract law as opposed to tort law. Accordingly, for the condominium association to proceed on a theory of a breach of the implied warranty of habitability against a subcontractor, there would have to be a contractual relationship between the parties. Because no such contractual relationship existed between the condominium association and the subcontractor, the claim for breach of the implied warranty of habitability was dismissed.
The times have now changed. Subcontractors no longer need to be fearful of being sued by a homeowner or buyer under the implied warranty of habitability for latent defects to a property unless they have an actual contract with the party – something that is rare.
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Roenan Patt at: (312) 368-0100 or email@example.com.