Understanding the Implied Warranty of a New Home Purchase and GBL-777a
Updated: May 30
When you buy a new home, chances are the home is anything but new. On Long Island, which saw a housing boom after World War 2, many houses are about 70 years old. Throughout the five boroughs of New York City, it is not unusual for a home to be over 100 years old. So even though we can look at these old houses and marvel at how they were built ("they don't make 'em like they used to," is the common refrain), a house that is 70 or over 100 years old or even less than ten years old, for that matter, has a history and that history includes the wear-and-tear that structures inevitably go through. As any physicist or homeowner will tell you, entropy, a process that goes from order to chaos, is real.
While many of the homes in our area have a long history, new construction is happening all the time. While all home buyers are concerned about vital systems in the house, such as the plumbing, heating, electrical, cooling, and ventilation, a buyer of a new home has the comfort of knowing the contractors that installed these systems may still be responsible for them even after the sale of the house.
General Business Law (GBL) 777a
General Business Law (GBL) 777a states that "a housing merchant implied warranty is implied in the contract or agreement for the sale of a new home and shall survive the passing of title." For example, if a builder fails to construct a home in a "skillful manner," liability may be imposed for any defects that arise within one year after the passing of title.
A building is "constructed in a skillful manner" if it comports with specific, state-wide building code standards. If there is no specific standard within the relevant building code, then the construction must comport with locally accepted building practices.
If there are defects within the plumbing, electrical, heating, cooling, and ventilation systems of the home due to the builder's failure to install such systems in a skillful manner, the statute imposes liability for two years after the warranty date.
Finally, the statute warrants that the home will be free from "material defects" for six years after the warranty date.
Material Defects: Understanding Your Rights as a Homeowner
A building is designed, first and foremost, to stand under its weight while being inundated by weather, vibrations from cars and trucks, and people living there. If you have ever bought a home and asked if a certain wall could be removed, you might have been surprised to learn that it couldn't, at least not easily, since it is a "load-bearing" wall. Load-bearing parts of a building are what the weight of the whole building is resting upon, and those items cannot be removed without some serious engineering to account for the load.
Material defects are defects to those load-bearing portions of the home that are vital to a building being safe and inhabitable. Due to the essential nature of these parts and systems, the law is very clear about how long a contractor may be held responsible for those systems.
It is important to note that material defects will render a building unsafe and uninhabitable. In a case such as a previously flooded basement which led to mold cannot be counted as a material defect if those portions of the home are still in use and the homeowner makes no claim that the house is unusable or unsafe.
It is also essential to understand that a contractor can only be held accountable for defective workmanship or materials by the builder, agent, employee, or subcontractor. Material provided by the homeowner or an unrelated third party will not be covered by GBL 777.
Patent Defects: The Importance of a Thorough Home Inspection
Patent defects, on the other hand, are not vital to the overall safety and habitability of the home. Instead, they are issues that are "discovered or readily discoverable prior to closing." This is where it becomes essential for buyers to hire an experienced and qualified home inspector. Accordingly, GBL 777a precludes recovery for patent defects, which an examination should reveal when the buyer, before accepting the title, "has examined the home as fully as the buyer desired or has refused to examine the home."
Proactively Honoring Warranties: The Role of Builders and Homeowners
After closing, if a defect potentially covered by 777a is discovered, the home buyer cannot immediately jump to legal action. Instead, a process must be followed, including providing the proper notification of a warranty claim and providing the builder with a "reasonable opportunity" to inspect and repair the portion of the home to which the warranty claim relates. This allows everyone involved to verify that the issue is legitimately a 777a issue and, if it is, to proactively honor the warranty on the systems they provided before the courts get involved. Again, allowing people to work together to solve a problem is a vital part of the process.
However, just because a 777a claim is made, it does not mean the builder is responsible. It is important to work with a law firm that understands the intricacies of the law that governs such warranties.