## Facts

- Tina Zambrano contracted to purchase a newly constructed home from M & RC II LLC; the home was built by its affiliate, Scott Homes Development Company (collectively, Scott Homes).
- The preprinted purchase agreement required Zambrano to accept a third-party administered “Home Buyer’s Warranty” as the exclusive warranty.
- The agreement stated the buyer accepted the express warranty “in lieu of all other warranties,” including any implied warranty of workmanship or habitability.
- After taking the home, Zambrano alleged construction and design defects, including grading, drainage, and hardscape problems.
- Zambrano sued Scott Homes, asserting (among other claims) breach of Arizona’s implied warranty of workmanship and habitability applicable to builder-vendor sales of new homes.
- Scott Homes contended the implied-warranty claim was barred because Zambrano contractually waived any implied warranties in exchange for the express warranty.

## Issues

1. Whether a builder-vendor and homebuyer may, by contract, disclaim and waive the implied warranty of workmanship and habitability and replace it with an express warranty.
2. Whether Arizona public policy renders such a waiver unenforceable despite general freedom of contract.

## Decision

- The Arizona Supreme Court held that public policy prohibits enforcement of contractual waivers disclaiming the implied warranty of workmanship and habitability in builder-vendor sales of new homes, even if an express warranty is provided.
- The court reversed the superior court’s summary judgment for Scott Homes and remanded for further proceedings.
- The court vacated the court of appeals’ opinion while reaching the same bottom-line result favoring Zambrano.

## Legal Principles

- Arizona implies a warranty of workmanship and habitability in every contract between a builder-vendor and a homebuyer.
- Courts generally enforce contract terms unless a clearly identifiable public policy outweighs enforcement.
- The implied warranty serves consumer-protection goals by shifting the risk of latent, undiscoverable defects from buyers to builders and by holding builders accountable for deficient construction.
- Contractual waiver of the implied warranty is unenforceable because permitting waivers would predictably eliminate the warranty in practice and leave buyers inadequately protected against latent defects.
- An express warranty with limited coverage periods, limited defect categories, exclusions, or procedural restrictions does not justify replacing or contracting around the implied warranty.

## Conclusion

The court ruled that the implied warranty of workmanship and habitability in new-home builder-vendor sales is nonwaivable as a matter of Arizona public policy, so the purchase agreement’s disclaimer could not bar Zambrano’s implied-warranty claim, and the case was remanded for further proceedings.


Zambrano v. M & RC II LLC, 254 Ariz. 53 (Ariz. 2022)