Protecting Condo Dwellers

In recent years, there has been in an ever-increasing number of cases of construction defect claims invoking limited new home warranties. Recourse is now available to condominium unit-owners faced with leaky roofs, inoperable air-conditioning systems, or faulty electrical wiring. New York State law protects all new home purchasers from such problems as limited construction defects, substandard materials, and inferior workmanship, covering periods for one, two, and six years. As part of the General Business Law, the New Home Warranties Section 777 can save homeowners thousands of dollars in repair costs.
Specifically, the law provides, that for

(1) "one year from and after the warranty date the home will be free from defects due to a failure to have been constructed in a skillful manner."

(2) "two years from and after the warranty date the plumbing, electrical, heating, cooling, and ventilation systems of the home will be free from defects due to a failure by the builder to have installed such systems in a skillful manner."

(3) "six years from and after the warranty date the home will be free from material defects," which include defective workmanship by the builder, agents, employees, or subcontractors, defective materials furnished by the builder or defective design; all of which make reference to the home and not the common areas.

In order for condo owners to exercise their warranty rights under the law, however, the date of passing of title for occupancy must first be determined. The criteria for occupancy may be the date the purchaser or the family first occupied the unit, or the date of the delivery of the deed to the purchaser — whichever occurred first. Therefore, because a warranty runs for different periods for different owners, depending upon the effective date of the warranty, it can become an issue when dealing with, say, a defective roof common to multiple units. If one or more units exceed the time limits of the warranty, the claim against the warranty may be endangered.

A housing merchant implied warranty might be excluded or modified by the builder or seller of a new home only if the buyer is offered a limited warranty in accordance with the provisions of the law. A copy of the express terms of the limited warranty shall be provided, in writing, to the buyer for examination prior to the time of the buyer's execution of the contract or agreement to purchase the home. In addition, a copy of the express terms of the limited warranty shall be included in, or annexed to, and incorporated in, the contract or agreement.

The language of the contract or agreement for sale of the new home must conspicuously mention the housing merchant implied warranty and provide that the limited warranty excludes or modifies the implied warranty. Language to exclude all implied warranties is sufficient if it states, for example: "There are no warranties which extend beyond the face hereof." Moreover, the limited warranty shall meet or exceed the standards provided in the law.

A limited warranty sufficient to exclude or modify a housing merchant- implied warranty must be written in plain English and must clearly disclose that the warranty is a limited warranty which limits implied warranties on the sale of the new home and the words "limited warranty" must be clearly and conspicuously captioned at the beginning of the warranty document.

In addition, the identification of the names and addresses of all warrantors and the identification of the party or parties to whom the warranty is extended and whether it is extended to subsequent owners must be clearly stated.

The limited warranty must be extended to the first owner of the home and survive the passing of title but may exclude any, or all, subsequent owners.

A statement of the products or parts covered by the limited warranty and the clear and conspicuous identification of any parts or portions of the home or premises that are excepted or excluded from warranty coverage and the standards that will be used to determine whether a defect has occurred must be included, as well.

Any exception, exclusion, or standard of the limited warranty that does not meet or exceed a relevant specific standard of the applicable building code — or, in the absence of such standard — a locally accepted building practice, shall be void as contrary to public policy. In addition, any exception, exclusion, or standard that fails to ensure that a home is habitable by permitting conditions to exist that render the home unsafe, shall be considered void, as well.

An action for damages, or other relief caused by the breach of an implied warranty, may be initiated prior to the expiration of one year after the applicable warranty period, or within four years after the warranty date, whichever is later. In addition, if the builder makes repairs in response to a warranty claim, an action with respect to such a claim may be commenced within one year after the last date on which the repairs were performed.

Albert F. Pennisi, a partner in Pennisi Daniels & Norelli, has been a practicing attorney for 30 years and has served as outside Counsel for the New York State Department of Taxation. He is the president of the Federation of New York Housing Cooperatives.