Implied Warranties On All New Home Sales Including Condominiums

Pursuant to Md. Real Prop. Code Title 10, certain implied warranties are applicable to the sale of every newly constructed home in Maryland. These warranties are applicable to all “improvements,” which are defined as “every newly constructed private dwelling unit, and fixture and structure which is made part of a newly constructed private dwelling unit at the time of its construction.” Section 10-201(b). They are enforceable against a “vendor,” defined as “any person engaged in the business of erecting or otherwise creating an improvement on realty, or to whom a completed improvement has been granted for resale in the course of his business.” Section 10-201(e). The broadly worded implied warranties provide that the improvement is: (1) Free from faulty materials; (2) constructed according to sound engineering standards; (3) constructed in a workmanlike manner; and (4) fit for habitation.┬áSection 10-203(a). In the event of a defect that constitutes a breach of these warranties, “the court may award legal or equitable relief, or both, as justice requires.” Section 10-204(a). The warranties run for “one year after delivery [of the deed] or after the taking of possession by the original purchaser, whichever occurs first,” except that “where the dwelling is not complete at the time of delivery of the deed, one year from the date of completion or taking of possession by the original purchaser, whichever occurs first.” Additionally, “[i]n the case of structural defects,” the warranties run for “2 years after the date of completion, delivery, or taking of possession, whichever occurs first.” Section 10-204(c). The warranties do not expire in the event of a subsequent sale by the original purchaser. Section 10-204(c).

An action for breach of the warranties “shall be commenced with two years after the defect was discovered or should have been discovered, or within two years after expiration of the warranty, whichever occurs first. Accordingly, this creates a maximum period in which a claim must be brought of three years after taking possession, and four years in case of structural defects. However, the period may be shorter if it is demonstrated that the defect was, or should have been, discovered at a date earlier than the end of the warranty. Indeed, if the issue should have been observed at the time of possession, the two year period for filing a claim would begin immediately, regardless of whether it involves a structural defect.

In Starfish Condominium Association v. Yorkridge Service Corp., 195 Md. 693 (1983), the Court of Appeals held that the Title 10 warranties were applicable to newly constructed condominium units and the common elements. Significantly, it ruled that “one or more of the original purchasing unit owners in the condominium could directly have sued for breach of ┬ž10-203 implied warranties as to the common elements and could have sought the entire damages to the common elements.” 295 Md. At 707. This is true even where the claims of some unit owners might be time-barred. The action could also be brought by the council of unit owners in its representative capacity of two or more unit owners with viable claims.