Fattah v. Bim , 2015 IL App (1st) 140171 ( 2015 )

Illinois Official Reports
Appellate Court
Fattah v. Bim, 2015 IL App (1st) 140171
Appellate Court JOHN FATTAH, Plaintiff-Appellant, v. MIREK BIM and ALINA
Caption BIM, Defendants-Appellees.
District & No. First District, Fifth Division
Docket No. 1-14-0171
Filed May 1, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 11-L-6937; the
Review Hon. Sanjay T. Taylor, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Voelker Litigation Group, of Chicago (Daniel J. Voelker, of counsel),
Appeal for appellant.
No brief filed for appellee.
Panel PRESIDING JUSTICE PALMER delivered the judgment of the court,
with opinion.
Justices McBride and Reyes concurred in the judgment and opinion.
OPINION
¶1 The patio on plaintiff John Fattah’s single-family home collapsed four months after he
moved in. Plaintiff had bought the house “as is” from its original purchaser, who had waived
the implied warranty of habitability on the house when she purchased it new three years earlier.
Plaintiff filed suit against defendants Mirek and Alina Bim, the developers of the house,
alleging breach of the implied warranty of habitability. The circuit court held for defendants,
finding that the original purchaser’s waiver of the implied warranty of habitability bound
plaintiff. On appeal, plaintiff argues: (1) the original purchaser’s waiver of the implied
warranty of habitability does not bind plaintiff, a subsequent purchaser who had no knowledge
of the waiver, and (2) it is irrelevant that plaintiff purchased the house from the original
purchaser “as is.” Defendants have not filed a brief in response but we may consider the case
on plaintiff’s brief alone pursuant to First Capitol Mortgage Corp. v. Talandis Construction
Corp., 63 Ill. 2d 128, 133 (1976). We reverse and remand.
¶2 BACKGROUND
¶3 Mirek Bim (Bim) was the president and owner of Masterklad, Inc. (Masterklad), a
corporation principally engaged in the business of building houses. In the summer of 2005,
Masterklad began construction of a single-family home at 3140 Henley Street, Glenview,
Illinois (the house). Six months after the house was completed, Bim hired a subcontractor to
add a 1,000-square-foot patio to the house. The patio was over six feet high, built on a grade
sloping downward from the back of the house and supported by a retaining wall. A door
opened onto the patio from the back of the house. While the house had three other entrances,
namely, through the front door, a side door and the garage, the door to the patio provided the
only exit from the rear of the house and served as access to the patio.
¶4 In May 2007, Beth Lubeck purchased the new house from Masterklad for $1,710,000. In
July 2007, she and Bim, as president of Masterklad, executed a “waiver-disclaimer of implied
warranty of habitability” agreement. In the agreement, Masterklad “hereby and forever”
disclaimed and Lubeck “knowingly, voluntarily, fully and forever” waived the implied
warranty of habitability applicable to the new house. An “express warranties” provision in the
agreement provided:
“The Agreement does provide that Purchaser will receive from Seller (the
‘Warrantor’) and [sic] express written warranty the form of which is attached to the
Agreement. The Warrantor shall comply with the provisions of the express warranty
and Purchaser accepts the express warranty granted therein as a substitute for the
Implied Warranty of Habitability hereby waived by Purchaser and disclaimed by
Seller.”
¶5 In the agreement, the parties acknowledged that, if a dispute arose between Lubeck and
Masterklad, Lubeck would not be able to rely on the implied warranty of habitability as a basis
for suing Masterklad and Masterklad could not use the implied warranty of habitability as a
defense. Instead, she would rely on the express written warranties. In a “survival and benefit”
provision, the parties agreed:
“The Waiver and Disclaimer of Implied Warranty of Habitability contained here
*** shall be binding upon and inure to the benefit of Seller, Purchaser and their
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respective successors, assigns, heirs, executors, administrators, and legal and personal
representative.”
The agreement provided that it was made a part of the real estate contract between Lubeck and
Masterklad. The record on appeal contains a copy of neither the sales contract between Lubeck
and Masterklad nor of the express written warranty given in exchange for the waiver.
¶6 In May 2010, three years after Lubeck purchased the house, she sold it to plaintiff “as is”
for $1,050,000. There is no copy of the real estate sales contract between Lubeck and plaintiff
in the record, only a copy of the “ ‘As Is’ Addendum Rider” which, according its terms, was
made a part of and incorporated into the real estate sales contract. The rider provides:
“Seller and Buyer acknowledge and agree that the Property is being sold to Buyer
in its existing, ‘as is’ condition *** and Seller shall not be responsible for the repair,
replacement or modification of any deficiencies, malfunctions or mechanical defects
on the Property or to any any improvements thereon ***. Seller makes no
representation or warranty to Buyer, either express or implied, as to the (1) condition of
the Property, (2) zoning *** or (3) the suitability of the Property for the Buyer’s
intended use or purpose or for any other use or purpose.”
Pursuant to the rider, Lubeck agreed that selling the property “as is” did not relieve her from
her “applicable legal obligation to disclose any and all known material latent defects” to
plaintiff. The sale to plaintiff closed in November 2010.
¶7 In February 2011, four months after plaintiff moved into the house, the patio collapsed. In
July 2011, plaintiff filed a complaint against defendants alleging they were the developers of
the property and had breached the implied warranty of habitability on the house by delivering
the house with latent defects in the construction and/or design of the patio that led to its
collapse. 1 He asserted defendants were the developers of the house and had impliedly
warranted that the house would be in a safe, fit and habitable condition and free from defects.
Plaintiff claimed that the defects in the home were not discoverable by him at the time of
purchase and, as a result of the defect and defendants’ breach, he was now required to repair
the patio to bring it to a safe and habitable condition. He sought damages in excess of $86,000.
Three days after plaintiff filed his complaint, Masterklad was voluntarily dissolved.2
¶8 Defendants filed a motion for summary judgment, arguing: (1) Lubeck’s
waiver/Masterklad’s disclaimer of the implied warranty of habitability was binding on
plaintiff; (2) plaintiff waived the implied warranty of habitability because he bought the house
“as is”; (3) the implied warranty of habitability did not apply because the alleged defects did
not affect habitability; and (4) the implied warranty of habitability did not apply because the
alleged defects were not latent.
¶9 In an affidavit attached to defendants’ for summary judgment, Bim stated that Lubeck had
purchased the home “with a limited one-year warranty,” Masterklad and Lubeck had executed
the waiver/disclaimer agreement and made it part of their real estate sales contract and all
1
Alina Bim (Alina) is the wife of Mirek Bim. Plaintiff named Alina as a defendant, asserting the
Bims were developers of the house. As the trial court noted, there was no evidence presented regarding
Alina’s relationship to Masterklad. However, in their pro se answer to plaintiff’s motion for default
judgment, defendants acknowledge that “we [defendants] sold” the house to Lubeck.
2
At trial, Bim testified that he had since reregistered Masterklad as a “DBA” sole proprietorship in
Cook County.
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agreements with Lubeck “were fully performed.” Bim asserted that he met with Lubeck at the
house at the time she was selling the house to plaintiff and saw “there were crumbling and
subsiding patio stones along the wall.” He claimed “the defects in the patio” were not latent at
that time as they were “clearly visible upon casual observation of anyone on the patio or
looking out the back door” and Lubeck was, therefore, “well aware” that the retaining wall of
the patio was collapsing when she sold the property to plaintiff. Bim stated that he had a
conversation with Lubeck while standing on the patio on the day she signed the sales contract
with plaintiff and “the defect in the patio was clearly obvious at the time.” He claimed he asked
Lubeck whether she intended to ask Masterklad to repair the patio, “merely as a plea of
goodwill,” and she replied that she was not going to request any repairs to defects in the patio
as her buyer was purchasing the property “as is.” Bim asserted that the collapse of the retaining
wall on the back patio “does not interfere with the home’s habitability” as “it is [still] possible
to freely enter and exit the premises” through the three other entrances/exits to the house.
¶ 10 In an affidavit attached to plaintiff’s response to the motion for summary judgment,
plaintiff claimed that, at the time he signed the purchase agreement with Lubeck and closed on
the house, he was unaware that Lubeck had signed an agreement waiving her right to assert an
implied warranty of habitability claim against Masterklad. He stated that he had bought the
house from Lubeck “as is” and understood that he was waiving some of his rights to seek
recourse against Lubeck. Plaintiff asserted, however, that “it did not occur to [him], and [he]
did not intend, that this rider impacted any right that [he] might have against any party other
than Lubeck.” He stated that he observed “some deterioration on the brickwork of the patio” at
the time he signed the sales contract but did not observe any deterioration “with respect to the
retaining wall of the patio.” After signing the purchase agreement, plaintiff commissioned a
home inspection of the house. Plaintiff asserted that “[t]he inspector, while noting
deterioration in the brickwork, did not report any problem with the retaining wall of the patio.”
There is no copy of the inspector’s report in the record. Plaintiff claimed that the rear door to
the house was six feet off the ground and, therefore, the six-foot-high patio provided the rear
exit from the house. He asserted the patio’s collapse removed that exit and the principal
outdoor entertainment for his family and the “only convenient and safe place to have family
barbeques.” He claimed the patio’s collapse had “significantly impaired [his family’s]
enjoyment of the property and prevented [them] from using the house as [they] intended at the
time of purchase.”
¶ 11 The circuit court denied defendants’ motion for summary judgment and the case proceeded
to trial, with defendants appearing pro se.3
¶ 12 During the bench trial, plaintiff testified that, when he bought the house, he saw that one
corner of the patio was “kind of cracked” and had been cemented but he thought the patio was
“in good shape.” The inspector he hired to inspect the patio at that time did not indicate there
was any structural defect in the patio. Plaintiff testified regarding the extent of the damage to
the patio and how he and his family used the patio and rear entrance from the house to the patio
to come and go from the house.
3
Defendants initially appeared pro se. They then obtained counsel. Defendants’ counsel prepared
their motion for summary judgment but withdrew after the court denied the motion. When defendants
failed to obtain new counsel, the court granted them leave to proceed pro se.
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¶ 13 Michael Loyfman, a mechanical engineer and general contractor, testified that he had been
hired by plaintiff to inspect the patio after the collapse. Loyfman had constructed “hundreds”
of patios over his 33-year career and it was his opinion that, in order to be structurally sound,
the retaining wall of plaintiff’s patio should have been built with an 8- to 12-inch-thick
concrete wall. He stated that the patio had, however, been constructed with only 4-inch thick
“block” wall with two hollow holes in each brick and, as a result, this retaining wall could not
support the weight of the patio and gave way. Loyfman explained his opinion in detail and
testified it would not have been possible for anyone to differentiate between an 8-inch solid
concrete wall and a 4-inch hollow “block” wall before the patio collapsed unless the person
first removed some of the paving bricks on the retaining wall to expose the structure. He also
stated that the design of the patio did not provide proper drainage and, consequently, “the
weather in Chicago” would destroy the patio. Loyfman estimated the cost to replace/repair the
patio to be between $70,000 and $100,000.
¶ 14 Bim, appearing pro se, testified that he was the developer and general contractor of the
house and the patio. He claimed the patio collapsed as a result of lack of maintenance, asserting
that plaintiff and Lubeck had not consistently cleaned snow off the entire patio and the patio
collapsed as a result of lack of maintenance. Bim testified regarding the “one year” limited
warranty on the house and warranty exclusions agreed to by Masterklad and Lubeck
referencing two documents, a “certificate of limited warranty” and a “warranty exclusions,”
neither of which is in the record. He testified regarding his continuing efforts, during his
servicing visits to the house, to have Lubeck properly clean all the snow off the patio, claimed
there were other entrances to the house and asserted the patio was for recreational use and most
people used a patio only “half” a year.
¶ 15 On December 9, 2013, the circuit court held in defendants’ favor. In its written opinion and
order, the court held the evidence showed that latent defects in the patio resulted in the patio’s
collapse. It found that the masonry block perimeter wall of the patio was inadequate to
withstand the outward forces of “six feet and approximately 150 tons of earth, crushed stone,
and paver blocks inside the perimeter walls,” resulting in the collapse. It found defendants’
argument that the patio failed due to plaintiff and Lubeck’s failure to clear snow off the patio
during the winter months unpersuasive.
¶ 16 The court then found that, although the patio had latent defects, plaintiff could not recover
as, pursuant to the waiver/disclaimer agreement, Lubeck had expressly waived and Masterklad
expressly disclaimed the implied warranty of habitability. The court pointed out that the
waiver agreement provided that the waiver/disclaimer “shall survive the closing of the sale of
Purchaser of the Residence and shall be binding upon and inure to the benefit of Seller,
Purchaser and their respective successors, assigns.”
¶ 17 In response to plaintiff’s argument that he could not be bound by the waiver/disclaimer
agreement as he had bought the house without knowledge of Lubeck’s waiver, the court noted,
without further explanation, “there is no dispute that he purchased the home from Ms. Lubeck
‘as is.’ ” It also stated that, as plaintiff did not argue that the waiver between Lubeck and
defendants was ineffective and as a knowing waiver or disclaimer of an implied warranty of
habitability is enforced in Illinois, the waiver was enforceable against plaintiff. The court
reasoned that the terms of the waiver/disclaimer agreement extended Lubeck’s waiver and
Masterklad’s disclaimer to Lubeck’s and Masterklad’s successors and assigns. The court
found the public policy behind the implied warranty of habitability was not undermined by
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binding a subsequent purchaser to a waiver and disclaimer of an implied warranty of
habitability between the builder and the original purchaser. It held “no builder or developer can
predict who will buy the home from his original buyer” and a subsequent buyer could protect
himself “by obtaining a representation in the purchase contract regarding whether the implied
warranty of habitability was waived or not by the original purchaser.” The court found that
“[r]equiring the builder to rely on the original purchaser to disclose to a subsequent purchaser
that the implied warranty was waived and disclaimed would unnecessarily frustrate the policy
favoring the enforcement of knowing waiver.”
¶ 18 On January 8, 2014, plaintiff filed a timely notice of appeal.
¶ 19 ANALYSIS
¶ 20 The trial court found Lubeck’s waiver of the implied warranty of habitability binding on
plaintiff, who had bought the house from Lubeck “as is” and without knowledge of her waiver
of the warranty. Plaintiff raises two assertions of error, arguing (1) waiver of an implied
warranty of habitability cannot bind a subsequent purchaser who has no knowledge of the
waiver and (2) the fact that he purchased the home “as is” is irrelevant.
¶ 21 In Petersen v. Hubschman Construction Co., 76 Ill. 2d 31 (1979), our supreme court
explained that the implied warranty of habitability is a creature of public policy and a judicial
innovation that aims to protect innocent purchasers of new houses who subsequently
discovered latent defects in their homes. Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 183 (1982)
(citing Petersen, 76 Ill. 2d at 41). A fundamental reason for implying a warranty of habitability
is “the unusual dependent relationship of the vendee to the vendor.” Petersen, 76 Ill. 2d at 41.
As a result of mass production and the nature of the modern construction methods, the
purchaser of a home has little or no opportunity to inspect the home prior to purchase. Id. at 40.
Thus, a purchaser, who is generally not knowledgeable in construction practices, must rely
upon the integrity and the skill of the builder-vendor, who is in the business of building and
selling homes. Id.
¶ 22 The Petersen court explained that “[t]he vendee has a right to expect to receive that for
which he has bargained and that which the builder-vendor has agreed to construct and convey
to him, that is, a house that is reasonably fit for use as a residence.” Id. Therefore, “[i]f
construction of a new house is defective, its repair costs should be borne by the responsible
builder-vendor who created the latent defect.” Redarowicz, 92 Ill. 2d at 183. To that end, “it is
appropriate to hold that in the sale of a new house by a builder-vendor, there is an implied
warranty of habitability which will support an action against the builder-vendor by the vendee
for latent defects.” Petersen, 76 Ill. 2d at 39-40. The implied warranty of habitability applies
not only to builder-vendors, but also to subcontractors and developer-vendors. See Minton v.
Richards Group of Chicago, 116 Ill. App. 3d 852, 855 (1983) (extending the implied warranty
of habitability to subcontractors); Tassan v. United Development Co., 88 Ill. App. 3d 581, 587
(1980) (extending the implied warranty of habitability to developer-vendors and condominium
purchasers).
¶ 23 The implied warranty of habitability protecting the original purchaser of a new home
extends to subsequent purchasers. Redarowicz, 92 Ill. 2d at 183. The supreme court reasoned
that a subsequent purchaser is like the initial purchaser in that neither is knowledgeable in
construction practice and must rely on the expertise of the person who built the home to a
substantial degree. Id. “The compelling public policies underlying the implied warranty of
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habitability should not be frustrated because of the short intervening ownership of the first
purchaser; in these circumstances the implied warranty of habitability survives a change of
hands in the ownership.” Id.
¶ 24 The supreme court noted that, “[w]hile the warranty of habitability has roots in the
execution of the contract for sale [citation], we emphasize that it exists independently” and
“[p]rivity of contract is not required.”4 Id. “ ‘The fact that the subsequent purchaser did not
know the home builder, as did the original purchaser, does not negate the reality of the
“holding out” of the builder’s expertise and reliance which occurs in the marketplace.’ ” Id.
(quoting Terlinde v. Neely, 271 S.E.2d 768, 769 (S.C. 1980)). Thus, “ ‘any reasoning which
would arbitrarily interpose a first buyer as an obstruction to someone equally as deserving of
recovery is incomprehensible.’ ” Id. at 185 (quoting Moxley v. Laramie Builders, Inc., 600
P.2d 733, 736 (Wyo. 1979)). The court limited its holding extending the implied warranty of
habitability from builder-vendors to subsequent purchasers “to latent defects which manifest
themselves within a reasonable time after the purchase of the house.” Id.
4
The supreme court also noted that extending the implied warranty of habitability to subsequent
purchasers was consistent with the Uniform Land Transactions Act (Unif. Land Transactions Act
§ 2-312, 13 U.L.A. 615 (1980)) (the Act) adopted by the National Conference of Commissioners on
Uniform State Laws in August 1975. Redarowicz, 92 Ill. 2d at 184. The court stated that section 2-312
of the Act, titled “ ‘Third Party Beneficiaries and Assignment of Warranty,’ ” “provides that a
subsequent purchase carries with it an assignment of the seller’s warranty of quality rights to the
buyer.” (Emphasis omitted.) Id. The court found pertinent the following language:
“(a) A seller’s warranty of title extends to the buyer’s successors in title.
(b) Notwithstanding any agreement that only the immediate buyer has the benefit of warranties
of quality with respect to the real estate, or that warranties received from a prior seller do not pass to
the buyer, a conveyance of real estate transfers to the buyer all warranties of quality made by prior
sellers. However, any rights the seller has against a prior seller for loss incurred before the
conveyance may be reserved by the seller expressly or by implication from the circumstances. 13
Unif. Laws Ann. 615 (1980).” (Emphasis added and internal quotation marks omitted.) Id. at
184-85.
The Uniform Land Transactions Act has not been adopted in Illinois or in any other state.
Further, although section 2-312(b) of the Act states that a seller’s warranties of quality are
conveyed to a subsequent purchaser, section 2-312(c) of the Act specifically provides that such
conveyances are unaffected by any disclaimer or limitation of liability that the subsequent purchaser
did not know about at the time he made the purchased. Section 2-312(c) provides:
“A seller’s warranty of quality to a protected party extends to any successor in title of the protected
party unaffected by any disclaimer or limitation of liability of which the successor had no reason to
know at the time of the conveyance to the successor. A successor has reason to know of a
disclaimer or limitation of liability if it appears in a recorded deed or other recorded document
granting the real estate to the protected party.” Unif. Land Transactions Act § 2-312(c), 13 U.L.A.
615 (1980).
In other words, an original purchaser’s waiver of a warranty of habitability is not conveyed to a
subsequent purchaser unless the subsequent purchaser knew about the waiver at the time of
conveyance. Although not adopted in Illinois, section 2-312(c), supports plaintiff’s argument that he
cannot be bound by Lubeck’s waiver as he did not know about the waiver when he bought the house.
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¶ 25 Despite the strong public policy reason behind the implied warranty of habitability, the
supreme court found that “a knowing disclaimer of the implied warranty [of habitability is not]
against the public policy of this State.” Petersen, 76 Ill. 2d at 43. However:
“ ‘[O]ne seeking the benefit of such a disclaimer must not only show a conspicuous
provision which fully discloses the consequences of its inclusion but also that such was
in fact the agreement reached. The heavy burden thus placed upon the builder is
completely justified, for by his assertion of the disclaimer he is seeking to show that the
buyer has relinquished protection afforded him by public policy. A knowing waiver of
this protection will not be readily implied.’ ” (Emphasis in original.) Id. (quoting
Crowder v. Vandendeale, 564 S.W.2d 879, 881 n.4 (Mo. 1978)).
Any disclaimer or waiver of the implied warranty of habitability “must be strictly construed
against the builder-vendor” and “ ‘boilerplate’ clauses, however worded, are rendered
ineffective in such a disclaimer.” Id. (quoting Crowder, 564 S.W.2d at 881).
¶ 26 Following the high standard set forth in Petersen, the party raising a disclaimer or waiver
as a defense therefore has the burden to show the disclaimer or waiver is: “ ‘(1) *** a
conspicuous provision (2) which fully discloses the consequences of its inclusion (3) that was,
in fact, the agreement of the parties.’ ” 1324 W. Pratt Condominium Ass’n v. Platt
Construction Group, Inc., 2012 IL App (1st) 111474, ¶ 29 (quoting Board of Managers of
Chestnut Hills Condominium Ass’n v. Pasquinelli, Inc., 354 Ill. App. 3d 749, 758 (2004)).
“[A]ny disclaimer that does not reference the implied warranty of habitability by name is not a
valid disclaimer of that warranty.” Board of Managers of the Village Centre Condominium
Ass’n v. Wilmette Partners, 198 Ill. 2d 132, 140 (2001). “[W]here disclaimer language is
brought to a purchasers’ attention, the consequences of the waiver are made known to the
purchasers, and the purchasers knowingly waive their rights to pursue an action for any alleged
breach of the implied warranty of habitability, there is an effective disclaimer of the implied
warranty of habitability under Petersen.” Id. at 141.
¶ 27 1. Impact of Lubeck’s Waiver on Plaintiff
¶ 28 It is uncontested that Lubeck’s waiver of the implied warranty of habitability on the house
was valid. The waiver agreement between Lubeck and Masterklad clearly explained the
implied warranty of habitability and the impact of Lubeck’s waiver of the warranty on
Lubeck’s right to pursue Masterklad for latent defects and reflected Lubeck’s agreement that
she “knowingly, voluntarily, fully and forever” waived the warranty. The question is whether
Lubeck’s valid waiver binds plaintiff, a subsequent purchaser.
¶ 29 Plaintiff argues that he is not bound by Lubeck’s waiver of the implied warranty of
habitability as he did not have any knowledge of Lubeck’s waiver of the implied warranty and
his waiver, therefore, was not knowing or intentional. He asserts that depriving him of
protection against latent construction defects when he never intended to waive that protection
is inconsistent with the public policy underlying the implied warranty of habitability, the
continual expansion of the warranty’s scope and the limitations placed on waivers of the
warranty. We agree, and find that Lubeck’s waiver of the implied warranty of habitability
cannot bind plaintiff as he had no knowledge of the waiver when he bought the house from
Lubeck and was not a party to the waiver agreement between Lubeck and Masterklad. The
question of whether a purchaser’s waiver of the implied warranty of habitability binds a
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subsequent purchaser who purchased the home without knowledge of the waiver is a matter of
first impression in Illinois.
¶ 30 As the proponent of the waiver, it is defendants’ burden to establish a valid waiver between
plaintiff and defendants. Petersen, 76 Ill. 2d at 43. They must, therefore, provide evidence
showing: (1) the language of the waiver is conspicuous and includes the words “ ‘implied
warranty of habitability,’ ” (2) the waiver fully discloses the consequences of its inclusion and
(3) the waiver was brought to the plaintiff’s attention and was, in fact, the agreement of the
parties, here plaintiff and defendants. Board of Managers of Chestnut Hills Condominium
Ass’n, 354 Ill. App. 3d at 758; Board of Managers of the Village Centre Condominium Ass’n,
198 Ill. 2d at 141. It is uncontested that there was no agreement, written or verbal, between
plaintiff and defendants/Masterklad, let alone one in which the waiver of the implied warranty
of habitability was conspicuously brought to plaintiff’s attention and the ramifications of the
waiver were fully explained to him prior to his express agreement to the waiver. Defendants
presented neither evidence nor argument showing the existence of such an agreement between
themselves and plaintiff or between Masterklad and plaintiff.
¶ 31 Instead, defendants based their argument below on Lubeck’s waiver, asserting that her
waiver of the implied warranty of habitability is binding on plaintiff. There is no question that
the implied warranty of habitability on the house could extend to plaintiff, a subsequent
purchaser, if the latent defects of which he complains “manifest[ed] themselves within a
reasonable time after the purchase of the house.” Redarowicz, 92 Ill. 2d at 185. However,
original purchaser Lubeck’s waiver of that implied warranty of habitability does not, without
more, extend to a subsequent purchaser. As discussed extensively above, although an implied
warranty of habitability can be waived, in order for a waiver to be effective, the purchaser must
have “knowingly waive[d] their rights to pursue an action for any alleged breach of the implied
warranty of habitability.” Board of Managers of the Village Centre Condominium Ass’n, 198
Ill. 2d at 141. Plaintiff was not a party to the waiver agreement and testified at trial that he was
unaware of Lubeck’s waiver of the implied warranty of habitability at the time he purchased
the house. Defendants did not refute this testimony. Therefore, as plaintiff was not a party to
the waiver agreement between Lubeck and Masterklad and defendants failed to prove plaintiff
knowingly agreed to accept Lubeck’s waiver of the implied warranty, there is no basis for
finding Lubeck’s waiver binding on plaintiff.
¶ 32 Defendants attempted to overcome plaintiff’s failure to knowingly agree to the waiver by
arguing that plaintiff is Lubeck’s successor and/or assign and, therefore, is bound to Lubeck’s
waiver agreement pursuant to the “survival and benefit” provision in the agreement. The
provision states: “The Waiver and Disclaimer of Implied Warranty of Habitability contained
herein shall survive the closing of the sale to Purchaser of the Residence and shall be binding
upon and inure to the benefit of the Seller, Purchaser and their respective successors, assigns,
heirs, executors, administrators, and legal and personal representatives.”
¶ 33 As noted above, the waiver of the implied warranty of habitability in question was a part of
the real estate sales contract between Lubeck and Masterklad. In Illinois, “privity accompanies
a valid assignment of a contract because it puts the assignee in the shoes of the assignor.”
Kaplan v. Shure Brothers, Inc., 153 F.3d 413, 418-19 (7th Cir. 1998) (citing Collins Co. v.
Carboline Co., 125 Ill. 2d 498 (1988)). However, defendants presented no evidence that
plaintiff is Lubeck’s successor and/or assign to the original real estate sales contract between
Lubeck and Masterklad such that he would be bound by the waiver agreement to which he was
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not a party. The sale of the real estate from Lubeck to plaintiff occurred three years after the
original sale to Lubeck. Based on the record, the only conclusion that can be drawn is that the
contract for sale between plaintiff and Lubeck is wholly separate and independent from the
earlier contract between Lubeck and Masterklad. In the absence of an assignment, there is no
privity between plaintiff and Masterklad which would place purchaser in the shoes of Lubeck
with regard to this waiver. Interestingly, while lack of privity defeats the waiver, lack of privity
does not defeat the warranty. Redarowicz, 92 Ill. 2d at 183. As plaintiff was not a party to the
waiver agreement and defendants failed to show plaintiff was Lubeck’s successor or assign to
the agreement, plaintiff is not bound by Lubeck’s waiver of the implied warranty of
habitability.
¶ 34 2. The “As Is” Provision
¶ 35 The fact that plaintiff purchased the house from Lubeck “as is” does not change our
determination that plaintiff is not bound by Lubeck’s waiver of the implied warranty of
habitability. First, the “as is” rider is a part of the contract between plaintiff and Lubeck, and as
such it does not affect any rights plaintiff may have against Masterklad. Second, even if the “as
is” rider could somehow affect plaintiff’s rights against Masterklad, the rider would not negate
the implied warranty of habitability. The “as is” rider agreement between plaintiff and Lubeck
contains no mention of either the implied warranty of habitability by name or of Lubeck’s
waiver of the implied warranty. Where, as here, a purchaser agrees to accept a house “as is”
and the “as is” provision does not refer to any particular implied warranty or implied
warranties in general and does not disclose the consequences of the purported disclaimer to the
implied warranty of habitability, the “as is” provision does not effectively disclaim the
builder-vendor’s implied warranty of habitability. See Schoeneweis v. Herrin, 110 Ill. App. 3d
800, 805-07 (1982) (holding that an “as is” clause, standing alone, cannot be an effective
waiver of implied warranty of habitability).
¶ 36 A purchaser’s agreement to accept a house “as is” does not amount to a knowing waiver of
the implied warranty of habitability unless the builder-developer/proponent of the waiver has
met his burden to show that the purchaser knowingly waived the implied warranty of
habitability by showing a conspicuous provision which fully discloses the consequences of its
inclusion and also that such was in fact the agreement reached. Swaw v. Ortell, 137 Ill. App. 3d
60, 71-72 (1984). Defendants presented no evidence to show that plaintiff knowingly waived
the implied warranty of habitability when he agreed to purchase the house “as is” from Lubeck.
Therefore, they failed to meet their burden to show that the “as is” provision was his knowing
waiver of the implied warranty of habitability on the house.
¶ 37 Further, a disclaimer or waiver of an implied warranty of habitability protects only the
person identified in the contract as benefitting from it. 1324 W. Pratt Condominium Ass’n,
2012 IL App (1st) 111474, ¶ 32 (holding that the waiver of the implied warranty of habitability
between developers and home purchasers did not apply to general contractor or masonry
subcontractor because they are not identified as beneficiaries in the waiver). The “as is” rider
forecloses plaintiff’s ability to pursue Lubeck for defects in the house but is silent regarding
plaintiff’s recourse against defendants and/or Masterklad for those defects. Defendants were
neither a party to plaintiff’s “as is” rider agreement with Lubeck nor listed in the agreement as
a beneficiary thereof. Therefore, defendants cannot claim the benefit of the waiver.
Accordingly, the “as is” provision in the agreement between plaintiff and Lubeck does not
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change our determination that plaintiff is not bound by Lubeck’s waiver of the implied
warranty of habitability.
¶ 38 In sum, (a) defendants failed to meet their burden to show plaintiff knowingly waived the
implied warranty of habitability, (b) the “successor and assign” provision in Lubeck’s waiver
agreement does not bind plaintiff and (c) the “as is” rider agreement does not bind plaintiff to
Lubeck’s waiver of the implied warranty of habitability. We, therefore, reverse the trial court’s
holding that Lubeck’s waiver of the implied warranty of habitability is binding on plaintiff and
its finding in favor of defendants.
¶ 39 3. Remand
¶ 40 Plaintiff asserts that, if we reverse the trial court’s decision in favor of defendants, then he
is entitled to recover under the implied warranty of habitability. We disagree.
¶ 41 In order to show breach of an implied warranty of habitability, a subsequent purchaser
must show: (1) there are latent defects in the house, (2) those latent defects interfere with the
reasonably intended use of the house and (3) those latent defects manifested themselves within
a reasonable time after the house was purchased. Redarowicz, 92 Ill. 2d at 185. The trial court
addressed the first element of plaintiff’s cause of action against defendants for breach of
implied warranty of habitability claim, finding that defendants sold the home with latent
construction defects in the patio that caused the collapse. However, given its decision that
Lubeck’s waiver of the implied warranty of habitability was binding on plaintiff, it did not
address the remaining two elements: whether the latent defects interfered with the reasonably
intended use of the house and whether those defects manifested within a reasonable time after
the purchase. These elements were contested below and are questions of fact for the trier of fact
to determine. Park v. Sohn, 89 Ill. 2d 453, 463 (1982); Glasoe v. Trinkle, 107 Ill. 2d 1, 13
(1985) (in the landlord-tenant context). Accordingly, given our reversal of the trial court’s
finding that plaintiff is bound by Lubeck’s waiver of the implied waiver of habitability, we
remand to the trial court for factual determinations on the remaining two elements of plaintiff’s
breach of the implied warranty of habitability claim.
¶ 42 CONCLUSION
¶ 43 For the foregoing reasons, we reverse the decision of the trial court and remand for further
proceedings.
¶ 44 Reversed and remanded.
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