Is contractual privity required for an owner to sue a builder for defective workmanship?

Construction defect lawsuits often involve claims against multiple defendants since the typical construction project involves work performed for the owner by a general contractor who in turn hires multiple subcontractors to perform the work.  But what happens when the original owner of the property with the improvements subsequently sells the property?  Can the subsequent owner sue the original builder for defective workmanship?

Austin Court of Appeals–no privity required

Background. The Austin Court of Appeals recently addressed this question involving the construction of a home. Plaintiffs purchased the home at issue from a third-party relocation company that had purchased the home from its original owners.  After purchasing the home, the Plaintiffs allegedly discovered various construction defects.  The Plaintiffs sued the builder even though they did not have a contract with the builder to build the home.  Their claims against the builder included those for breach of implied warranty to perform in a workmanlike manner. The builder contended that the Plaintiffs did not have the legal capacity to sue the builder for breach of warranty because the builder did not have a contract with the Plaintiffs.  Rather, the builder’s contract was with former owners of the property.

Holding. The court held that the Plaintiffs had the right to sue the builder for breach of implied warranty even though the Plaintiffs did not have a contract with the builder. “The supreme court has held that a subsequent purchaser of a home may maintain a cause of action for breach of the implied warranties of habitability and good workmanship, which are implied by every contract for the construction of a home. See Gupta, 646 S.W.2d at 169 (“We hold that [the implied warranty of habitability and good workmanship] does cover latent defects not discoverable by a reasonably prudent inspection of the building at the time of [a subsequent] sale…. As between the builder and owner, it matters not whether there has been an intervening owner.”).”Maroney v. Chip Buerger Custom Homes, Inc., 03-17-00355-CV, 2018 WL 3041087, at *8 (Tex. App.—Austin June 20, 2018, pet. filed).