Express promises made by sellers in property agreements establish what that seller’s potential liability may be to the purchaser. However, in many states, including Illinois, there are also implied warranties, including the warranty of habitability. The premise of the implied warranty of habitability is to protect inexperienced or unsophisticated purchasers from latent defects made by builders. In turn, that protection of the buyer, created by the implied warranty of habitability, can shift the allocation of risk from the buyer to the seller. The implied warranty of habitability has expanded over the past few decades to include the protection of purchasers of new homes sold by a builder as well as subsequent purchasers of existing homes. However, the implied warranty of habitability may be disclaimed by the seller and waived by the buyer if the disclaimer/waiver clause is conspicuous within the purchase agreement.

For example, in Board of Managers of Park Point at Wheeling Condominium Association v. Park Point at Wheeling, LLC, 2015 IL App. 123454 (September 2015), the Court dismissed the buyers’ claims that various parties involved in the design, construction and sale of a condominium complex completed in 2004 breached an implied warranty of habitability by incorporating latent defects into the units and common elements. Limited warranty language within the purchase agreement, which contained a disclaimer for a waiver of the implied warranty of habitability, was conspicuous and sufficient as a matter of law to bring the waiver to the buyer’s attention, and was thus an effective disclaimer. The seller was not required to verbally call the warranty disclaimer to each buyer’s attention, or have each buyer initial it. Because of the conspicuous nature of the disclaimer within the purchase agreement, the buyers were found to have knowingly waived their rights to bring an action for any alleged breaches of the implied warranty of habitability, and were found to have been aware of the possible consequences of disclaiming that warranty.

What does this mean for you?

As a property buyer, all property purchase agreements must be read very closely. A property seller need not bring a buyer’s attention to language within a purchase agreement that contains a disclaimer for a waiver of the implied warranty of habitability. In every context, always know exactly what you are agreeing to before you sign a contract.