106 Implied Warranty of Good Workmanship

• Jurisdiction: Arizona

A contractor who undertakes to build a structure must do so in a manner befitting one’s skill in that field, even though there is no express warranty. A contractor who supplies the plans also impliedly warrants that the structure will serve its intended purpose. These warranties apply even in the absence of privity to subsequent purchasers. Claims on them can be made as much as eight years after the work.

Even in the absence of a specific contractual provision, the law implies a warranty on the part of a contractor to perform the agreed task in a good and workmanlike manner and in a manner befitting a skilled contractor. Kubby v. Crescent Steel, 105 Ariz. 459, 466 P.2d 753 (1970); Cameron Co. v. Sisson, 74 Ariz. 226 246 P.2d 189 (1952); Reliable Elec. Co. v. Clinton Campbell Contractor, Inc., supra. In addition, where a contractor agrees to construct a structure to be used for a particular purpose, and supplies the plans as well, it impliedly warrants that the structure, when completed, will serve its intended purpose. Rosell v. Silver Crest Enter., 7 Ariz. App. 137, 436 P.2d 915 (1968).

The Rules of the Registrar of Contractors provide in part: “All work shall be done in a workmanlike manner” and sets forth minimum standards for good and workmanlike construction. A.A.C. R4-9-108. A.R.S. § 32-1154(A) provides that violation of a rule promulgated by the Registrar of Contractors constitutes grounds for suspension or revocation of a contractor’s license.

In Columbia Western Corp. v. Vela, 122 Ariz. 28, 592 P.2d 1294 (App. 1979), the court applied an implied warranty against a contractor who constructed a house and sold it to a purchaser. An express warranty was not applied because the plaintiff failed to get the express warranty into evidence. The builder argued that an implied warranty should not apply, because the rule in Arizona is that implied warranties as to quality or condition do not apply to realty. Voight v. Ott, 86 Ariz. 128, 132, 341 P.2d 923, 925 (1959). However, the court in Columbia Western held that implied warranties do arise out of the construction of new housing, which ultimately becomes realty. The builder does not escape these implied warranties merely by selling the house to the purchaser.

The court cited, in support of the rule that there is an implied warranty of good workmanship in the sale of a new house, the cases cited in this section. The court also quoted from a Texas case, that a rule of “caveat emptor” in the sale of new homes “does a disservice not only to the ordinary prudent purchaser but to the industry itself by lending encouragement to the unscrupulous, fly-by-night operator and purveyor of shoddy work.” Quoted 122 Ariz. at 32.

This rule was held to be enforceable by subsequent purchasers of the house in Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984). The court of appeals had reversed a trial court judgment with respect to a consumer fraud count and a punitive damage award, as well as an award for breach of implied warranty in favor of homeowners who were not in privity with the original builder-vendor. The supreme court affirmed with respect to the consumer fraud count and punitive damages, but vacated with respect to the warranty action by subsequent owners not in privity with the builder.

The supreme court stated that the same policy considerations that applied in Columbia Western applied equally to subsequent purchasers. The court stated that its holding was limited to latent defects which become manifest after the subsequent owner’s purchase and which would not have been discovered had a reasonable inspection of the structure been made prior to purchase. The burden is on the subsequent owner to show that the defect had its origin and cause in the builder-vendor and that the suit was brought within the appropriate statute of limitations.

In Smith v. Continental Bank, 130 Ariz. 320, 636 P.2d 98 (1981), the court held that the implied warranty of good workmanship applied only against a party in the construction business. In this case, a bank foreclosed on a housing project when the builder defaulted on its obligations to the bank. The bank hired another contractor to complete construction, and then...