Posted on February 4, 2008 by Rush Nigut

Iowa Supreme Court Decision a Crushing Blow to Builders

My friend and law partner Matt Gardner has an excellent summary on Sullivan & Ward's Iowa Law Blog about the crushing blow handed down to home builders this past Friday by the Iowa Supreme Court. 

The ruling holds builders responsible to subsequent owners for defective conditions.  The old law was caveat emptor or "buyer beware".  The Court noted that public policy justifications support further erosion of the doctrine of caveat emptor.  The purpose of the rule is to ensure that innocent home buyers are protected from latent defects.  The court said subsequent purchasers are in no better position to discover those defects than the original purchaser.  "Builders should be accountable for their work" quoted the court.

The new law might become known as the Home Builders' Attorneys Equal Employment Act (HBAEEA).  It seems inevitable more lawsuits will occur against builders because of the Court's interpretation.  Great if you are a homeowner but very bad for builders.

Read the full opinion here.

photo on flickr by pdz house

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Rush on Business - February 5, 2008 8:47 AM
I have often stressed the need for business people to follow corporate formalities and keep their corporations or limited liability companies up-to-date. However, the recent decision impacting builders from the Iowa Supreme Court makes it significantly...
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Sankey - February 4, 2008 10:32 AM

"crushing blow handed down to home builders this past Friday by the Iowa Supreme Court" ????

Oh my -- the sky is failing!

The only blow handed down is to builders of crappy houses. Who should pay for the cost of a latent defect -- the builder of it or some guy who buys the house three years later from the first buyer (the latent defect not manifesting itself until the second buyers ownership).

Rush Nigut - February 4, 2008 11:16 AM

Sankey:

Don't you mean "the roof is falling"? I don't disagree with your comment. Bad builders need to accept responsibility. However, the decision is a major blow to builders who previously did not have liability to subsequent purchasers. Now the law will require them to essentially provide an implied warranty for a 15-year period.

But I also believe this will impact other contractors as well because home builders who are sued are likely to bring in the subcontractors who performed the work into the lawsuits.

Rush

Sankey - February 7, 2008 9:59 AM

This Iowa City rag deals with the story well >>>

http://media.www.dailyiowan.com/media/storage/paper599/news/2008/02/06/Metro/Ruling.May.Affect.Suits-3191120.shtml

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