New York’s Implied Merchant Warranty for the Sale of New Homes: A Reasonable Extension to Reach Initial Owners

Monday, January 1st, 1990 at 12:00 am by Daniel J. Losito
Daniel J. Losito, New York’s Implied Merchant Warranty for the Sale of New Homes: A Reasonable Extension to Reach Initial Owners, 1990 Colum. Bus. L. Rev. 373

The application of the implied warranty of merchantability from the law of sales to the sale of new homes represents an abandonment of the ancient doctrine of caveat emptor, and affords greater protection to homebuyers making perhaps the largest investment of their lives. However, as with every full abandonment of old law, myriad new issues have arisen concerning the extent to which the implied warranty’s protections ought to be expanded. New York’s recent statutory formulaion of the implied merchant warranty for new home sales illustrates some of the most interesting of these issues. Under New York’s implied warranty statute, both the home’s initial owner and subsequent owners within the warranty period may bring actions for breach against the home’s builder-vendor regardless of whether or not privity exists between the parties. But what happens when that builder no longer exists? Or when the builder is a non-professional such as a lending institution completing work on a project after foreclosure? In these situations, the New York statute can be construed to allow remedies to subsequent purchasers against the home’s initial owner.

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