As reported by North Shore News (3/15/13), a collective of condo owners in the Canadian city of North Vancouver in British Columbia launched a lawsuit against Travelers Guarantee Company of Canada after water had allegedly seeped through the building envelope within the first five years following construction of the 13-story Q building on West First Street in the city. According to the terms of the home warranty insurance for the condo, such seepage should be covered for the first five years.
According to the report, damage from water seepage was first discovered in 2005, four years after the condo was built. The home warranty insurance company was duly contacted and repairs were carried out.
A year later, according to terms of the home warranty lawsuit launched by the condo owners, the water was back - this time, it was alleged, through the penthouse at the building’s upper-most floor.
Notified of the new leak, the insurance company duly inspected the building and determined the source of the leak was associated with mechanical equipment, rather than the building envelope. As the terms of the extended warranty only extended to the building envelope, the home warranty insurance company declined to resolve the problem, and the home warranty lawsuit was launched.
At a pre-trial hearing, the attorney representing the insurance company claimed that building codes allow for ingress of moisture through a building envelope to some degree, provided damage is not significant and does not negatively impact the health and safety of the occupants.
According to the report, once it was determined that a full trial would be required, the two sides settled out of court prior to the start of the scheduled trial. Terms of the bad faith insurance settlement were not disclosed.
Lest you think that the only thing a homeowner can count on is for things to get worse, a recent Pennsylvania Superior Court decision provides homeowners some hope when it comes to quality of workmanship inherent with a contractor.
According to the Pittsburgh Post-Gazette (1/14/13), not only can the primary owner of a new home bring a lawsuit against the contractor of a new home, but also any subsequent owner, provided the lawsuit is filed within the first 12 years of the home’s existence.
When the initial owners of a new home located in Jamison, Bucks County decided to sell just a few years after the home was constructed, subsequent owners discovered water leakage around the windows of the master bedroom.
While it is not known if home warranty insurance was involved, at the end of the day, the homeowners launched a lawsuit against the builder of the home alleging breach of implied warranty of habitability.
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Pennsylvania law, according to the report, stipulates that liability for hidden defects in a building must reside with the builder for a period of 12 years. The grey area of the law appeared to center on what happens if the original owners of a home sell within that 12-year window. Is protection under Pennsylvania law transferred to any subsequent owner?
The Pennsylvania Superior Court held that it does. For the purposes of the decision, builders must look upon the first 12 years as an extended warranty of implied habitability against hidden defects for the full term, no matter how many times the home changes hands over the interim. A home warranty lawsuit can be filed by any owner provided the lawsuit is filed within 12 years following completion of the home.