Caveat Emptor Overturned for Developers and Architects
In three decisions in 2002, the Massachusetts Supreme Judicial Court ("SJC") overturned 200 years of caveat emptor (literally, "buyer beware") in Massachusetts home sales. The court thereby imposed a welter of new obligations upon builders and professionals involved in the design, construction and sale of new houses and condominia:
The SJC based the obligation to disclose or correct hidden defects in each of the above cases on the fact that the builder or designer of the property was in a better position to know of defects than the buyer. This reasoning, applied in a case involving a homeowner-seller, would end 200 years in which the rule of caveat emptor has provided closure to all home sales.
Builders Must Warrant New Houses
The SJC implied a warranty of habitability in the sale of new houses by builder-vendors in the Commonwealth. The Court imposed this obligation on the ground that a builder-vendor is the only party that has opportunity to notice, avoid, or correct hidden structural defects during construction process. Albrecht v. Clifford, 436 Mass. 706 (2002).
Builders Must Warrant New Condominia
The SJC applied the same warranty of habitability to a Massachusetts condominium builder-seller. The court declared that a condominium, through its trustees, may recover for property damage that occurs because of construction defects to the units. Berish vs. Bornstein, 437 Mass. 252 (2002).
Architects Subject to More Damages
The SJC in another case awarded a condominium the right to recover against an architect for its costs to repair design defects that allowed water seepage into the condominium. This case overruled the "economic loss rule" in Massachusetts that barred recovery of purely economic losses in tort. Aldrich v. Add, Inc., 437 Mass. 213 (2002).