Court: Homeowners' warranties apply only to first buyer

The Pennsylvania Supreme Court has ruled that homeowners' warranties against defects apply only to a property's first buyer, and cannot be passed along in subsequent sales.

The unanimous decision, reversing a Pennsylvania Superior Court decision, said homeowners' warranties are based on the contractual relationship between a builder of a new home and its purchasers. There is no such relationship between the developer and subsequent purchasers, the court said in an opinion written by Justice Seamus P. McCaffery.

In finding that such warranties can only be exercised by first purchasers of new homes, the court rejected the reasoning of Superior Court, which said such warranties are aimed at equalizing the "disparate" positions of home sellers and buyers, and exist even in the absence of any contract between the two.

But the Supreme Court, ruling in a case brought by a Bucks County couple against the Cutler Group, a developer, said extending such warranties to a second purchaser was a matter of public policy and thus a decision better left to the state's General Assembly.

"We do not minimize the potential concerns, nor do we disregard the rationales set forth by the parties. . . ., " the court said. "However, the arguments are predominantly grounded in policy considerations that necessitate judgments reserved to the legislature."