## Facts

- A developer owned an existing building and contracted with Reliance Commercial Construction, Inc. to convert it into condominium units.
- The developer, not Reliance, sold the converted units to individual buyers.
- The unit owners formed The Lofts at Fillmore Condominium Association to manage the condominium property.
- The Association alleged various construction defects and sued the developer and Reliance for breach of the implied warranty of workmanship and habitability.
- For purposes of the case, the condominium conversion was treated as “new home construction” to which the implied warranty could apply.

## Issues

1. Whether the lack of contractual privity between condominium purchasers (through their association) and a builder that did not sell the units bars an implied-warranty claim for workmanship and habitability.
2. Whether a non-vendor homebuilder may be sued by buyers for breach of the implied warranty of workmanship and habitability.

## Decision

- The Arizona Supreme Court reversed summary judgment for Reliance and vacated the court of appeals’ affirmance.
- The court held that absence of contractual privity does not bar an action for breach of the implied warranty of workmanship and habitability against a builder, even if the builder was not the vendor.
- The case was remanded for further proceedings on the Association’s implied-warranty claim.

## Legal Principles

- Arizona law imposes an implied warranty that new residential construction is performed in a workmanlike manner and results in a habitable structure.
- The implied warranty is imposed by law to protect homebuyers from latent defects and to hold builders accountable for construction quality; it is not defeated by formal contract requirements when doing so would defeat the warranty’s protective function.
- The warranty’s focus is the builder’s construction work; liability does not turn on whether the builder also held title or signed the sales contract.
- Restricting implied-warranty liability to builder-vendors would create a loophole in common development structures where construction and sales roles are separated.

## Conclusion

The Arizona Supreme Court allowed a condominium association to pursue an implied-warranty claim against a non-vendor builder, holding that contractual privity is not required for breach of the implied warranty of workmanship and habitability in residential construction.


Lofts at Fillmore Condo. Ass’n v. Reliance Com. Constr., Inc., 218 Ariz. 574, 190 P.3d 733 (Ariz. 2008)