## Facts

- A developer sold the plaintiff a subdivision lot restricted to residential use.
- No municipal sewer was available; any residence would require an on-site septic system.
- After the purchase, county and federal health officials determined the lot was low, flood-prone, and unsuitable for an approved septic system, making it unsuitable for a dwelling.
- Neither the buyer nor the sellers knew of the unsuitability at the time of sale.
- The deed contained no express warranty regarding suitability or fitness.
- The plaintiff sought rescission and restitution based on an implied warranty that the lot was suitable for residential construction and habitation.
- The case was tried without a jury on stipulated facts; the trial court entered judgment for defendants without separately stating conclusions of law.
- The Court of Appeals reversed and remanded, recognizing an implied warranty; defendants appealed.

## Issues

1. Whether the trial court complied with Rule 52(a)(1) by entering a bare judgment for defendants without separately stating conclusions of law in a bench trial on stipulated facts.
2. Whether a developer who sells a lot for residential construction impliedly warrants that the lot is suitable for a residence, including suitability for necessary sewage disposal by septic system where no public sewer exists.

## Decision

- The Supreme Court held the trial court did not comply with Rule 52(a)(1) because it failed to state separately its conclusions of law, preventing meaningful review of the legal basis for judgment.
- The Court held that a developer selling a lot for the purpose of erecting a dwelling impliedly warrants the lot’s suitability for that purpose, including suitability for sanitary sewage disposal necessary for habitation.
- The Supreme Court affirmed the Court of Appeals and remanded for further proceedings consistent with these rulings.

## Legal Principles

- In nonjury trials, Rule 52(a)(1) requires the court to find facts specially and state separately the conclusions of law; a statement that a party is “not entitled to relief” is insufficient.
- When a developer sells a lot restricted and marketed for residential use, an implied warranty arises that the lot is fit for construction and ordinary residential use.
- Residential fitness includes the ability to install an approved septic system when public sewer service is unavailable.
- Breach of this implied warranty may support rescission and restitution even absent an express warranty and even if the seller lacked knowledge of the defect.

## Conclusion

The court required trial judges in bench trials to articulate separate legal conclusions under Rule 52 and recognized an implied warranty that developer-sold residential lots are suitable for residential construction and habitation, including necessary septic feasibility, permitting rescission when that basic suitability is absent.


Hinson v. Jefferson, 215 S.E.2d 102 (N.C. 1975)