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Condominium and New Home Warranties and Rights of Action. June 27, 2012. Raymond Daniel Burke Ober|Kaler 100 Light Street | Baltimore, Maryland 21202 410.347.7392 | [email protected] www.marylandcondolaw.com. Implied Warranties Under Maryland Law.

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Condominium and new home warranties and rights of action

Condominium and New Home Warranties and Rights of Action

June 27, 2012

Raymond Daniel Burke

Ober|Kaler

100 Light Street | Baltimore, Maryland 21202

410.347.7392 | [email protected]

www.marylandcondolaw.com


Implied warranties under maryland law

Implied Warranties Under Maryland Law

Warranties that the law implies in every new home purchase agreement


Implied warranties under maryland law1

Implied Warranties Under Maryland Law

Do not have to appear in any written document


Implied warranties under maryland law2

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

Apply to “improvements” meaning every newly constructed private dwelling unit and every fixture and structure made part of it at the time of construction by a building contractor of subcontractor


Implied warranties under maryland law3

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

Enforceable against a “vendor”

Any person engaged in the business of erecting or otherwise creating an improvement to realty

or

To whom a completed improvement has been granted for resale in the course of his business


Implied warranties under maryland law4

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

  • Free from faulty materials

  • Constructed according to sound engineering standards

  • Constructed in a workmanlike manner

  • Fit for habitation


Implied warranties under maryland law5

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

Home must comply with:

  • Applicable building codes

  • The contract documents

  • Industry standards

  • Manufacturer’s specifications

  • Americans With Disabilities Act


Implied warranties under maryland law6

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

Cannot be excluded or modified unless the home has been completed


Implied warranties under maryland law7

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

An exclusion or modification of the warranties on a completed home must:

  • Be in writing

  • Set out “in detail” the warranty to be excluded or modified

  • Set out the terms of the new agreement

  • State that the purchaser consents

  • Signed by the purchaser


Implied warranties under maryland law8

Implied Warranties Under Maryland Law

Implied Warranties Under Title 10

Run for one (1) year from

  • Delivery of the deed or

  • Date of possession

    Whichever is first

    Except:

    Where the home is not complete at the time of delivery of the deed, the warranties run one (1) year from

  • Date of completion or

  • Date of possession

    Whichever is first

    Except:

    For “structural defects” the warranties run for two (2) years from those dates


  • Implied warranties under maryland law9

    Implied Warranties Under Maryland Law

    Implied Warranties Under Title 10

    In the event of a breach of the warranties, a court may award legal or equitable relief, or both, as justice requires


    Implied warranties under maryland law10

    Implied Warranties Under Maryland Law

    Implied Warranties Under Title 10

    An action must be commenced

    • Within two (2) years after the defect as discovered or should have been discovered

      or

    • Within two (2) years after the expiration of the warranty

      Whichever is first


    Implied warranties under maryland law11

    Implied Warranties Under Maryland Law

    Implied Warranties Under Title 10

    Apply to newly constructed condominiums and the common elements 

    One or more original unit owners can sue for breach of the warranties as to the common elements, and can recover the full damages

    Even if some unit owners’ claims are time-barred

    The council of unit owners can bring the action on behalf of any two or more unit owners


    Implied warranties under maryland law12

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    The Title 10 implied warranties apply to all sales by developers of condominiums, and a “newly constructed private dwelling unit” means a newly constructed or newly converted condominium unit and its appurtenant undivided fee simple interest in the common areas


    Implied warranties under maryland law13

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    May not be modified or excluded


    Implied warranties under maryland law14

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranties on the unit

    In addition to the Title 10 implied warranties

    there is a warranty that the developer will correct any defects in materials or workmanship in the construction of

    • walls

    • ceilings

    • floors

      And that the heating and air-conditioning systems were installed in accordance with acceptable industry standards


    Implied warranties under maryland law15

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranties on the unit

    Run for one (1) year from the transfer of title to the unit

    Notice of a defect must be given to the developer within the one (1) year warranty period

    An action must be commenced within one (1) year of the end of the warranty period


    Implied warranties under maryland law16

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranty on the common elements

    In addition to the Title 10 warranties

    Warranty from the developer to the council of unit owners


    Implied warranties under maryland law17

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranty on the common elements

    In addition to the Title 10 warranties there is a warranty that the developer will correct any defects in defect in materials or workmanship in the following specified components

    and

    that the following components are within acceptable industry standards in effect when the building was constructed:

    roof

    electrical systems

    foundation

    plumbing systems

    external and supporting walls

    other structural components

    mechanical systems


    Implied warranties under maryland law18

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranty on the common elements

    Run for three (3) years from

    The first transfer of title to a unit owner

    Except:

    As to any common element not completed at the time of first transfer of title, the warranty runs for three (3) years from completion of that element or from its availability for use by all unit owners, whichever is later


    Implied warranties under maryland law19

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranty on the common elements

    Run for three (3) years from

    The first transfer of title to a unit owner

    or

    Runs for two (2) years from

    The date on which the unit owners, other than the developer and its affiliates, first elect a controlling majority of the board of directors

    Except:

    As to any common element not completed at the time of first transfer of title, the warranty runs for three (3) years from completion of that element or from its availability for use by all unit owners, whichever is later


    Implied warranties under maryland law20

    Implied Warranties Under Maryland Law

    Condominium Implied Warranties Under Title 11

    Implied warranty on the common elements

    Notice of a defect must be given to the developer within the two (2) or three (3) year warranty period whichever is applicable

    An action must be commenced within one (1) year of the end of the warranty period


    Homeowner association warranties

    Homeowner Association Warranties

    Every homeowner receives the Title 10 implied warranties on their home unless they are modified or excluded by contract


    Homeowner association warranties1

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    In addition to the Title 10 warranties on the homes Warranty from the “vendor” or “grantor” to the homeowners association


    Homeowner association warranties2

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    Common area must comply with:

    • Applicable building codes

    • The contract documents

    • Industry Standards


    Homeowner association warranties3

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    In addition to the Title 10 warranties on the homes Warranty from the developer to the homeowners association that the improvements to the common areas are

    • free of faulty materials

    • constructed according to sound engineering standards

    • constructed in a workmanlike man

    • Manufacturer’s specifications

    • Americans With Disabilities Act


    Homeowner association warranties4

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    Pools

    Playgrounds

    Clubhouses

    Sport Centers

    Pavilions


    Homeowner association warranties5

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    Retaining Walls

    Curbs and sidewalks

    Parking lots

    Drainage areas

    Private roads


    Homeowner association warranties6

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    Runs for two (2) years from the first transfer of title to a lot

    Except:

    As to any common are improvement not completed at the time of first transfer of title, the warranty runs for two (2) years from completion of that improvement or from its availability for use by the lot owners, whichever is later


    Homeowner association warranties7

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    Runs for two (2) years from the first transfer of title to a lot

    or

    Runs for two (2) years from the date on which the lot owners, other than the declarant and its affiliates, first elect a controlling majority of the governing body of the homeowner association


    Homeowner association warranties8

    Homeowner Association Warranties

    Common Area Warranties under Title 11B

    Implied warranty on the common areas

    Notice of a defect must be given to the vendor or grantor within the two (2) year warranty period

    An action can be brought by the homeowner association or any lot owner

    Action must be brought within one (1) year of the end of the warranty period


    Express warranties under maryland law

    Express Warranties Under Maryland Law

    Governed by Title 10

    Applies to representations concerning “improvements” meaning every newly constructed private dwelling unit and every fixture and structure made part of it at the time of construction by a building contractor of subcontractor


    Express warranties under maryland law1

    Express Warranties Under Maryland Law

    Governed by Title 10

    Representations by a “vendor”


    Express warranties under maryland law2

    Express Warranties Under Maryland Law

    Governed by Title 10

    Express warranties:

    • Any written affirmation of fact or promise which relates to the improvement and is made a part of the basis of the bargain between the vendor and the purchaser creates an express warranty that the improvement conforms to the affirmation or promise.

    • Any written description of the improvement, including plans and specifications of it, which is made part of the basis of the bargain between the vendor and the purchaser creates an express warranty that the improvement conforms to the description.

    • Any sample or model which is made a part of the basis of the bargain between the vendor and the purchaser creates an express warranty that the improvement conforms substantially to the sample or model.


    Express warranties under maryland law3

    Express Warranties Under Maryland Law

    Governed by Title 10

    Express warranties:

    Even oral representations may be actionable

    Not necessary to use formal words like “warranty” or “guaranty”

    Content of brochures and sales literature

    Statements by sales agents


    Express warranties under maryland law4

    Express Warranties Under Maryland Law

    Governed by Title 10

    Express warranties:

    Does not include affirmation of the value or statement of opinion or recommendation


    Express warranties under maryland law5

    Express Warranties Under Maryland Law

    Governed by Title 10

    Once made “neither words in the contract of sale, the deed, other instrument of grant, nor merger of the contract of sale into the deed or other instrument of grant is effective to exclude or modify the warranty.”


    Express warranties under maryland law6

    Express Warranties Under Maryland Law

    Governed by Title 10

    An exclusion or modification of an express warranty must:

    • Be in writing

    • Set out “in detail” the warranty to be excluded or modified

    • Set out the terms of the new agreement

    • State that the purchaser consents

    • Signed by the purchaser


    Express warranties under maryland law7

    Express Warranties Under Maryland Law

    Unless the express warranty provides otherwise:

    Run for one (1) year from

    • Delivery of the deed

    • Date of possession

      Whichever is first

      Except:

      Where the home is not complete at the time of delivery of the deed, The warranties run one (1) year from

    • Date of completion

    • Date of possession

      Whichever is first


    Express warranties under maryland law8

    Express Warranties Under Maryland Law

    In the event of a breach of an express, a court may award legal or equitable relief, or both, as justice requires


    Express warranties under maryland law9

    Express Warranties Under Maryland Law

    An action must be commenced

    • Within two (2) years after the defect as discovered or should have been discovered

      or

    • Within two (2) years after the expiration of the warranty

      Whichever is first


    Separate claims under contract law

    Separate Claims Under Contract Law

    A representation or promise about the condition of an improvement at the time it is sold is a warranty, and enforcement is governed by warranty law.


    Separate claims under contract law1

    Separate Claims Under Contract Law

    A promise to perform an obligation in the future other than the payment of money is a contractual obligation governed by the law of contracts


    Separate claims under contract law2

    Separate Claims Under Contract Law

    “We will fix it.”

    Creates a promise of future performance which constitutes a contractual obligation


    Separate claims under contract law3

    Separate Claims Under Contract Law

    Governed by the discovery rule:

    A claim accrues when the claimant knew, or, in the exercise of reasonable diligence, should have known, of the wrong

    A claim must be brought within three (3) years from the date of discovery


    Claims under the maryland consumer protection act

    Claims Under The Maryland Consumer Protection Act

    Applies to “consumer realty”

    New sales of real property purchased primarily for personal, household, family or agricultural purposes


    Claims under the maryland consumer protection act1

    Claims Under The Maryland Consumer Protection Act

    “Unfair and deceptive trade practices”

    Representation that realty has a “characteristic” or “quality” that it does not have

    A representation that a property was constructed in accordance with the plans and specifications is a representation of a “characteristic” which, if false, is an unfair and deceptive trade practice under the Act.


    Claims under the maryland consumer protection act2

    Claims Under The Maryland Consumer Protection Act

    Enforceable by the Attorney Generals’ Office

    The Act also provides for a private right of action to recover in law or equity

    Claimant can recover “reasonable attorney’s fees”


    Claims under the maryland consumer protection act3

    Claims Under The Maryland Consumer Protection Act

    Enforceable by the Attorney Generals’ Office

    The Act also provides for a private right of action to recover in law or equity

    Claimant can recover “reasonable ATTORNEY’S FEES”


    Negligence actions

    Negligence Actions

    Maryland recognizes a general cause of action for failure to exercise due care in construction. This includes negligence in the design and construction of the project, negligent selection of materials, and negligent supervision of the various trades.

    • A duty will be imposed, even where only economic loss is involved, where the nature of the harm gives rise to the risk of serious personal injury among a foreseeable group.

    • A duty will be imposed where the harm results in property damage.

    • Where the harm is purely economic loss, without the risk of personal injury, a duty will be imposed where there is contractual privity between the parties, or a sufficiently close nexus or relationship so as to be the functional equivalent of contractual privity.

      A action must be brought within three (3) years of discovery under the discovery rule


    Maryland construction law deskbook

    Maryland Construction Law Deskbook

    Published by the Maryland Bar Association Construction Law Section


    Maryland condo law blog

    Maryland Condo Law Blog

    www.marylandcondolaw.com


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