## Facts

- A builder-vendor completed construction of a single-family residence in or around early 1976 and sold it to the original purchasers.
- In April 1977, Donald J. Redarowicz bought the home from the original owners.
- At purchase, the alleged defects were not apparent.
- Soon after, Redarowicz discovered structural and water-intrusion problems, including a chimney and adjoining brick wall pulling away from the house, loose soil under the wall/chimney, inadequate depth of a supporting lintel, a cracked basement wall, and water leakage in the basement and near the chimney roof area.
- Redarowicz sued the builder-vendor on multiple theories, including negligence and implied warranty of habitability, seeking repair costs and related economic losses.

## Issues

1. Whether the implied warranty of habitability in a sale of new residential construction by a builder-vendor extends to a subsequent purchaser lacking privity with the builder.
2. Whether a homeowner may recover in negligence for purely economic loss from defective construction (repair costs and diminution in value) absent personal injury or damage to other property.
3. What limits apply to any implied-warranty recovery by a subsequent purchaser.

## Decision

- The Illinois Supreme Court affirmed in part and reversed in part and remanded.
- The court held that the implied warranty of habitability extends to subsequent purchasers, rejecting a strict privity requirement in this context.
- The court held that negligence is not available to recover purely economic loss for defective construction of the home itself; such losses are governed by contract/warranty remedies.
- The implied-warranty claim was reinstated, while dismissal of the tort-based claims for economic loss was affirmed.

## Legal Principles

- The implied warranty of habitability in new residential construction by a builder-vendor runs to subsequent purchasers, not only the first buyer.
- Extension of the warranty is justified by public policy protecting homebuyers who reasonably rely on a builder’s skill and may be unable to detect latent structural defects.
- A subsequent purchaser’s implied-warranty claim is limited to latent defects not discoverable on reasonable inspection at purchase and that render the home not reasonably fit for use as a residence, and must be brought within a reasonable time after discovery.
- Purely economic loss from construction defects (e.g., repair costs and diminution in value), without personal injury or damage to other property, is not recoverable in negligence; the appropriate remedies sound in contract and warranty.

## Conclusion

The court permitted a subsequent purchaser to proceed against the builder-vendor for latent, habitability-impairing defects under the implied warranty of habitability, but confined recovery for repair costs and diminished value to warranty/contract theories by rejecting negligence claims seeking only economic loss.


Redarowicz v. Ohlendorf, 441 N.E.2d 324 (Ill. 1982)