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Iowa Supreme Court: 2nd and 3rd Buyers can Sue Homebuilder
Saturday, 02 February 2008

Court: Buyers of pre-owned homes can sue builders
The Iowa Supreme Court ruled Friday that homeowners who find work-related defects years after the fact can file claims against contractors, even if they are not the original buyers. The 6-0 decision reversed two lower-court rulings against the Speights, the third owners of the house in question, and overturned a similar case in Linn County. Brian Rickert, the attorney for the contractor, said the ruling could "flood the courts with lawsuits" from homeowners and dumps a significant burden on legitimate builders. He fears frivolous claims and costly court battles over damage that might have been caused by previous owners.

Court: Buyers of pre-owned homes can sue builders

Mike Speight realized something was wrong with his $250,000 Clive home when he was able to puncture the waterlogged siding with his fingertip.

Speight and his wife, Bev, who spent $25,000 on home repairs over two months, learned Friday that they can sue the company that constructed the house, even though it was custom-built for someone else four years before the couple bought it in 2000.

The Iowa Supreme Court ruled Friday that homeowners who find work-related defects years after the fact can file claims against contractors, even if they are not the original buyers.

The 6-0 decision reversed two lower-court rulings against the Speights, the third owners of the house in question, and overturned a similar case in Linn County.

Brian Rickert, the attorney for the contractor, said the ruling could "flood the courts with lawsuits" from homeowners and dumps a significant burden on legitimate builders. He fears frivolous claims and costly court battles over damage that might have been caused by previous owners.

"It couldn't have come at a worse time, especially considering the state that home builders are in right now," Rickert said. "The market is just terrible, and this ruling basically says builders have to warranty a house for 15 years."

The Speights tried to sue Walters Development Co. in 2005 over the alleged discovery of defective shingles and rain gutters on their house at 1985 N.W. 149th St. The subpar materials had allowed severe water damage, they said.

But a Polk County judge said Walters was shielded from responsibility because the home had twice changed hands. The Speights appealed and lost but continued the fight to the high court.

"We believe that Iowa law should follow the modern trend allowing a subsequent purchaser to recover against a builder for a breach of the implied warranty of workmanlike construction," Justice Jerry Larson wrote in Friday's 14-page ruling that extended "implied warranty" rights to the Speights and sent the case back for trial.

The Speights' attorney, Harley Erbe, hailed the ruling as "a great victory for consumers, because the fact that many people nowadays are buying homes that were built for somebody else, as opposed to having homes that were custom-built."

Erbe said the Speights want reimbursement for the repairs and other expenses.

Rickert, the contractor's lawyer, said Friday that he had not yet discussed the ruling with company owner David Walters. Walters did not return a telephone message from The Des Moines Register.

Juries and judges in other states have split on the issue, the justices said. Many states do not allow subsequent buyers to sue the original contractor because the two sides did not form a contract. Others concluded that such rules do not apply to real estate.

"The reality is that our society is increasingly mobile and, as a result, the home's ownership is likely to change hands a number of times," Friday's ruling said.

The decision is "not a huge sea change" in the law, and it will not likely affect builders' day-to-day operations, said Eric Burmeister, an attorney for Regency Homes in West Des Moines, one of the area's largest home builders. But the ruling serves to clarify a legal gray area, he said. Regency was not directly involved in the Speight case.

"This obviously is a change that benefits consumers and puts a further burden on builders," Burmeister said.

David Vollmar, head of the Des Moines Homebuilders Association, said the ruling puts the onus on builders for anything a buyer might deem faulty. "How are you going to prove this was the home builder and not the homeowner?" Vollmar said.

The Speights moved to Clive from Kansas in 2000. They paid $250,740 for the two-story, three-bedroom house, and noticed water trickling down a basement wall a few years later.

Mike Speight filled every crack he could find with caulk, but the trickle grew into a stream when it rained, he said. Parts of the basement flooded. Mold formed. The couple noticed water streaks on the outdoor siding, followed by rot.

"We didn't know what was happening," Speight said. "By the time the damage started to manifest itself," it was too late.

Walters refused to help because the Speights did not buy the house from the company, Speight said.

A home-improvement company allegedly found design flaws, inferior materials and apparent shortcuts, Speight said.

The repairs took two months and required crews to tear open the walls and roof and tear up carpeting.

Reporter Grant Schulte can be reached at (515) 699-7020 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080202/NEWS/802020339/-1/NEWS04

 
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