## Facts

- A contractor–builder and a real-estate broker jointly built a new residence on a steep Seattle lot that previously had a removed house and foundation.
- Before building, the broker learned the prior house had been removed after drainage from uphill septic tanks allegedly impaired soil stability; the septic system was later disconnected and a city sewer installed.
- The broker consulted city officials and was told the slope was considered stabilized; the builder viewed the old foundation as poorly built rather than a clear warning of unstable subsoil.
- The plaintiffs bought the newly constructed house as the first purchasers and occupants.
- After the plaintiffs took possession, the basement, walls, floors, and foundation cracked and slipped, and supporting terrain moved away from the foundation.
- The plaintiffs sued for rescission alleging fraud and misrepresentation; the trial court rescinded the sale but found fraud and deceit were not proved by the required heightened standard.
- The defendants appealed, arguing rescission could not stand absent proven fraud.

## Issues

1. Whether the sale of a brand-new house by a builder-vendor to its first purchaser carries an implied warranty that the foundation is firm and secure and the structure is reasonably fit for habitation.
2. Whether breach of that implied warranty can support rescission despite the failure to prove fraud or deceit.

## Decision

- The court affirmed the decree of rescission.
- It held that a builder-vendor who sells a new home to the first purchaser gives an implied warranty that the foundation is firm and secure and the dwelling is reasonably safe and fit for habitation.
- Serious latent structural and soil-related failures shortly after purchase constituted a breach of that implied warranty, justifying rescission even without proof of fraud.

## Legal Principles

- In a sale of a newly constructed home by a builder-vendor to the first purchaser, the law implies a warranty of structural soundness, including that the foundation is firm and secure.
- The implied warranty protects against latent defects not reasonably discoverable by an ordinary buyer at the time of sale.
- Proof of fraud is not required to obtain contract relief where the builder-vendor’s implied warranty is breached by serious latent structural defects.
- Rescission is an available remedy when the buyer does not receive the substantially sound new dwelling that was the subject of the bargain.

## Conclusion

The court affirmed rescission because the builder-vendors’ sale of a new home to first-time occupants carried an implied warranty of a firm and secure foundation, and the home’s latent foundational and terrain failures breached that warranty notwithstanding the absence of proven fraud.


House v. Thornton, 457 P.2d 199 (Wash. 1969)