Implied Warranties Apply to Improvements that Provide Essential Services

Maronda Homes, Inc. v. Lakeview Reserve, SC10-2292 (Fla. July 11, 2013):

The Florida Supreme Court agreed with the Fifth District that the law of implied warranties of fitness and merchantability apply to improvements that provide essential services to the habitability of a residence. Even though the infrastructure improvements in a subdivision may not be physically attached to the homes, many component parts provide essential services that directly affect the habitability of the homes.

Lakeview Reserve filed an action against Maronda Homes for defective design and construction of the subdivision’s infrastructure, roadways, retention ponds, underground pipes, and drainage systems, breaching the implied warranties of fitness and merchantability for the residential home development and causing damage to the entire residential subdivision. Lakeview Reserve asserted that the defects were latent, as they were not readily discoverable by home purchasers who lacked specialized knowledge, and undiscoverable by homebuyers upon the exercise of reasonable diligence at the time of purchase. Lakeview Reserve alleged that it sustained serious damage due to the defects because of its obligation to correct and repair the subdivision’s structural defects which impacted the homes in the development.

Maronda Homes moved for final summary judgment, contending that the common law implied warranties of fitness and merchantability did not apply. The trial court agreed because the defects did not immediately support the residences. The Fifth District reversed the trial court, holding that the common law warranty of habitability is applicable in this case.

The defects in the real estate at issue here are part of a fundamental and essential support system for a complex infrastructure designed, constructed, and installed by the developers as a precondition to build the residential units and to obtain a certificate of occupancy for residential use. These defects are more readily discoverable by the developers and less likely to be discovered by a typical homebuyer. These types of systems are absolutely essential to support the residential use of the residential units in the community.

The Florida Supreme Court adopted the essential services test articulated in the Fifth District’s decision. Implied warranties of fitness for a particular purpose, habitability, and merchantability apply to structures in common areas of a subdivision that immediately support the residence in the form of essential services. Items that provide a mere convenience or aesthetic beauty, such as landscaping, sprinkler systems, recreational facilities, or a security system, are excluded from the definition of essential services.