## Facts

- Investors purchased a 32-unit apartment complex from a professional developer that constructed and held apartment projects for its own ownership and management, not for resale.
- When approached by the buyers’ broker, the property was not listed for sale; the seller agreed to sell for an acceptable price.
- At the time of sale, four of five buildings were completed and occupied by tenants (some for about 18 months); the fifth building was only framed.
- The parties executed a customized, attorney-drafted purchase contract; the buyers were represented by counsel.
- The contract included an inspection/disclaimer clause stating the purchaser had made a full inspection and that no covenants about the condition of improvements or repairs would bind the seller unless set out in the contract or attached writings.
- Years after closing, buyers discovered latent structural defects: foundations inadequately designed for soil conditions, requiring substantial repair and risking future failure.
- Buyers sued for breach of an implied warranty of habitability; the trial court found the defects latent and entered judgment for the buyers.
- The Washington Supreme Court accepted certification and reviewed the seller’s appeal.

## Issues

1. Whether an implied warranty of habitability applies to the sale of an apartment complex purchased as an income-producing investment when the developer did not build the project for resale and the contract contained a broad inspection/disclaimer clause.
2. Whether Washington’s implied warranty of habitability is limited to sales of new houses built for the purpose of sale by commercial builder-vendors.

## Decision

- The Washington Supreme Court reversed the judgment for the buyers.
- The court held Washington’s implied warranty applies only to the sale of a new house built for the purpose of sale by a commercial builder.
- Because the seller built and held the apartment complex for its own ownership/management, and the sale was an arm’s-length investment transaction after tenant occupancy, no implied warranty of habitability arose.
- The buyers therefore could not recover on an implied-warranty theory.

## Legal Principles

- In Washington, a vendor-builder impliedly warrants structural fitness for habitation only in the sale of a new house built for the purpose of sale by a commercial builder-vendor.
- The implied warranty doctrine does not extend by default to commercial investment purchases of multi-unit apartment properties, particularly where the seller did not construct the property for resale.
- Courts are reluctant to impose implied protections that reallocate risks in negotiated, counsel-assisted commercial transactions, especially where the contract contains inspection and condition-disclaimer language.

## Conclusion

The court confined Washington’s implied warranty of habitability to new-house consumer sales by builder-vendors who build for sale, and denied warranty recovery for latent foundation defects discovered after an apartment-complex investment purchase from a developer that built for its own long-term ownership rather than resale.


Frickel v. Sunnyside Enters., Inc., 106 Wash. 2d 714, 725 P.2d 422 (1986)