SUPREME COURT OF ARIZONA 

En Banc 

THE LOFTS AT FILLMORE ) Arizona Supreme Court 

CONDOMINIUM ASSOCIATION, an ) No. CV-07-0416-PR 

Arizona nonprofit corporation, ) 

 ) Court of Appeals 

 Plaintiff/Appellant, ) Division One 

 ) No. 1 CA-CV 06-0257 

 v. ) 

 ) Maricopa County 

RELIANCE COMMERCIAL CONSTRUCTION, ) Superior Court 

INC., an Arizona corporation, ) No. CV2004-012726 

 ) 

 Defendant/Appellee. ) 

 ) 

 ) 

 ) O P I N I O N 

_________________________________ ) 

Appeal from the Superior Court in Maricopa County 

The Honorable Kristin C. Hoffman, Judge 

REVERSED AND REMANDED 

________________________________________________________________ 

Opinion of the Court of Appeals, Division One 

___ Ariz. ___, ___ P.3d ___ (2007) 

VACATED 

________________________________________________________________ 

THORSNES BARTOLOTTA McGUIRE San Diego, CA 

 By John F. McGuire, Jr. 

And 

EKMARK & EKMARK, L.L.C. Scottsdale 

 By Curtis S. Ekmark 

 Quentin T. Phillips 

Attorneys for The Lofts at Fillmore Condominium Association 

BREMER, WHYTE, BROWN & O'MEARA, LLP Phoenix 

 By Jeffrey D. Holland 

 John J. Belanger 
2

And 

ISRAEL & GERITY, PLLC Phoenix 

 By Kyle A. Israel 

 Jeffrey R. Cobb 

Attorneys for Reliance Commercial Construction, Inc. 

FEINBERG GRANT MAYFIELD KANEDA & LITT, LLP Phoenix 

 By Daniel H. Clifford 

 Bruce Mayfield 

 Charles R. Fenton 

Attorneys for Amicus Curiae Regatta Pointe Condominium 

Association 

DICKS, COGLIANESE, LIPSON & SHUQUEM, APC Phoenix 

 By Michael D. Dicks 

 Darrien O. Shuquem 

Attorneys for Amici Curiae Alta Mesa Resort Village Homeowners 

Association, Inc.; Bella Vista Condominium Homeowners 

Association; Villages of Chandler: The Boardwalk Homeowners 

Association, Inc.; Cave Creek Villas Homeowners Association, 

Inc.; Kennedy Park Homeowners Association, Inc.; Mona Lisa 

Village Homeowners Association; Scottsdale Abrivado Condominium 

Association; The Salado Grand Residential Association, Inc.; Tre 

Bellavia Homeowners Association, Inc.; and The Village at 

Carefree Conference Resort Condominium Association, Inc. 

KASDAN SIMONDS RILEY & VAUGHAN, LLP Phoenix 

 By Kenneth S. Kasdan 

 Stephen L. Weber 

 Michael J. White 

Attorneys for Amicus Curiae Adobe Villas Condominium Association 

ECKLEY & ASSOCIATES, P.C. Phoenix 

 By J. Robert Eckley 

 M. Philip Escolar 

Attorneys for Amici Curiae National Association of Home 

Inspectors, Inc. and American Society of Home Inspectors 

BOROWSKY LAW, P.C. Scottsdale 

 By Lisa M. Borowsky 

Attorney for Amici Curiae Arizona Consumers Council and Consumer 

Federation of America 
3

KASDAN SIMONDS RILEY & VAUGHAN, LLP Phoenix 

 By Kenneth S. Kasdan 

 Stephen L. Weber 

 Michael J. White 

And 

OSBORN MALEDON, P.A. Phoenix 

 By Thomas L. Hudson 

Attorneys for Amicus Curiae Frye Park Townhomes Homeowner 

Association 

________________________________________________________________ 

H U R W I T Z, Justice 

¶1 We consider today whether a homebuilder who is not 

also the vendor of the residence can be sued by a buyer for 

breach of the implied warranty of workmanship and habitability. 

We conclude that absence of contractual privity does not bar 

such a suit. 

I. 

¶2 William Mahoney and The Lofts at Fillmore, L.L.C. 

(collectively, “the Developer”) contracted with Reliance 

Commercial Construction, Inc. (“Reliance”) to convert a building 

owned by the Developer into condominiums. The Developer later 

sold condominium units to individual buyers, who formed The 

Lofts at Fillmore Condominium Association (“the Association”). 

Claiming various construction defects, the Association 

subsequently sued the Developer and Reliance for breach of the 

implied warranty of workmanship and habitability. 
4

¶3 The superior court granted summary judgment to 

Reliance. The court of appeals affirmed, finding the implied 

warranty claim barred because the Association had no contractual 

relationship with Reliance. The Lofts at Fillmore Condo. Ass'n 

v. Reliance Commercial Constr., Inc., ___ Ariz. ___, ___ P.3d 

____, 2007 WL 3287391 (App. Nov. 6, 2007). That court 

distinguished Richards v. Powercraft Homes, Inc., which held 

“that privity is not required to maintain an action for breach 

of the implied warranty of workmanship and habitability,” 139 

Ariz. 242, 244, 678 P.2d 427, 429 (1984), because in Richards

the builder was also the vendor of the property. The Lofts, ___ 

Ariz. at ___ ¶¶ 6-10, ___ P.3d at ___. 

¶4 We granted the Association’s petition for review 

because the issue presented is of statewide importance. See

ARCAP 23(c). We have jurisdiction pursuant to Article 6, 

Section 5(3) of the Arizona Constitution and A.R.S. § 12-120.24 

(2003). 

II. 

A. 

¶5 Arizona courts have long recognized that, “as to new 

home construction, . . . the builder-vendor impliedly warrants 

that the construction was done in a workmanlike manner and that 

the structure is habitable.” Columbia Western Corp. v. Vela, 

122 Ariz. 28, 33, 592 P.2d 1294, 1299 (App. 1979). A claim for 
5

breach of the implied warranty sounds in contract. Woodward v. 

Chirco Constr. Co., 141 Ariz. 514, 516, 687 P.2d 1269, 1271 

(1984). “[A]s a general rule only the parties and privies to a 

contract may enforce it.” Treadway v. W. Cotton Oil & Ginning 

Co., 40 Ariz. 125, 138, 10 P.2d 371, 375 (1932). In Richards,

however, we held that suit on the implied warranty of 

workmanship and habitability may be brought not only by the 

original buyer of the home, but also by subsequent buyers. 139 

Ariz. at 245, 678 P.2d at 430. 

¶6 Richards involved claims by homebuyers against a 

builder-vendor – a company that built and then sold homes to 

residential purchasers. Reliance, in contrast, only built The 

Lofts condominiums; the Developer owned the property throughout 

and sold the residences to members of the Association. The 

issue before us is whether the absence of privity bars the 

Association’s suit on the implied warranty against Reliance. 

B. 

¶7 The threshold question is whether a builder who is not 

also the vendor of a new home impliedly warrants that 

construction has been done in a workmanlike manner and that the 

home is habitable.1

                                                           

1

 The parties have apparently assumed that the condominium 

conversion constituted new home construction. We also so assume 

without deciding the issue. 
6

¶8 Although prior Arizona cases do not directly address 

this issue, they provide important guidance. It has long been 

the rule “that implied warranties as to quality or condition do 

not apply to realty.” Voight v. Ott, 86 Ariz. 128, 132, 341 

P.2d 923, 925 (1959). In Columbia Western, the court of appeals 

recognized this rule, but distinguished Voight: 

In our opinion Voight is authority for the proposition that 

no implied warranties arise from the sale of realty, but is 

not dispositive of the issue of implied warranties arising 

out of the construction of new housing which ultimately 

becomes “realty.” 

122 Ariz. at 30, 592 P.2d at 1296. 

¶9 Columbia Western then turned to settled Arizona law 

holding that “a contractor impliedly warrants that the 

construction he undertakes which ultimately becomes realty will 

be performed in a good and workmanlike manner.” Id. at 31, 592 

P.2d at 1297 (discussing Kubby v. Crescent Steel, 105 Ariz. 459, 

466 P.2d 753 (1970); Cameron v. Sisson, 74 Ariz. 226, 246 P.2d 

189 (1952); and Reliable Electric Co. v. Clinton Campbell 

Contractor, Inc., 10 Ariz. App. 371, 459 P.2d 98 (1969)). These 

cases are distinguishable from Columbia Western, as they 

involved agreements directly between the contractors and the 

plaintiffs for non-residential construction. Nonetheless, the 

court of appeals concluded from these cases that Arizona had 

abandoned the traditional rule of caveat emptor in suits against 
7

contractors for defects in construction incorporated into 

realty. Id. 

¶10 Based on this understanding, Columbia Western held 

that an implied warranty of good workmanship and habitability 

was also given in connection with new home construction, noting 

that 

[b]uilding construction by modern methods is complex 

and intertwined with governmental codes and 

regulations. The ordinary home buyer is not in a 

position, by skill or training, to discover defects 

lurking in the plumbing, the electrical wiring, the 

structure itself, all of which is usually covered up 

and not open for inspection. 

Id. at 32, 592 P.2d at 1298 (quoting Tavares v. Horstman, 542 

P.2d 1275, 1279 (Wyo. 1975)). 

¶11 The Arizona cases upon which the court of appeals 

relied in Columbia Western did not involve a sale of the 

underlying property. See Kubby, 105 Ariz. at 459-60, 466 P.2d 

at 753-54 (involving alleged failure properly to build a roof on 

plaintiff’s shed); Cameron, 74 Ariz. at 227-28, 246 P.2d at 189-

90 (involving allegedly defective well drilled on defendant’s 

property); Reliable Elec., 10 Ariz. App. at 373, 459 P.2d at 100 

(involving faulty construction of electrical system in a kiln 

owned by the plaintiff). Given its careful distinction of 

Voight, Columbia Western thus rests on the premise that an 
8

implied warranty arises from the construction of a new home, 

whether or not the builder is also a vendor of the home.2 

¶12 Richards is to the same effect. We stated there that 

the purpose of the implied warranty “is to protect innocent 

purchasers and hold builders accountable for their work.” 

Richards, 139 Ariz. at 245, 678 P.2d at 430 (quoting Moxley v. 

Laramie Builders, Inc., 600 P.2d 733, 736 (Wyo. 1979)). We also 

reiterated the policy considerations that gave rise to the 

recognition of the warranty in Columbia Western, noting that 

house-building is frequently undertaken on a large 

scale, that builders hold themselves out as skilled in 

the profession, that modern construction is complex 

and regulated by many governmental codes, and that 

homebuyers are generally not skilled or knowledgeable 

in construction, plumbing, or electrical requirements 

and practices. 

Id.

¶13 Thus, although Columbia Western and Richards involved 

builder-vendors, both opinions – and our prior cases – make 

clear that an implied warranty arises from construction of the 

home, without regard to the identity of the vendor. Moxley, 

                                                           

2

 All parties to this case have assumed that there is a 

single implied warranty of workmanship and habitability, as 

opposed to two separate warranties. See Nastri v. Wood Bros. 

Homes, Inc., 142 Ariz. 439, 444, 690 P.2d 158, 163 (App. 1984) 

(holding that the Arizona decisions establish one implied 

warranty). We therefore today make a similar assumption, 

without deciding the issue. We also assume arguendo, as have 

the parties, that suit could properly be brought against the 

Developer on an implied warranty theory. 
9

which we cited with approval in Richards, makes this point 

expressly: 

We can see no difference between a builder or 

contractor who undertakes construction of a home and a 

builder-developer. To the buyer of a home the same 

considerations are present, no matter whether a 

builder constructs a residence on the land of the 

owner or whether the builder constructs a habitation 

on land he is developing and selling the residential 

structures as part of a package including the land. 

It is the structure and all its intricate components 

and related facilities that are the subject matter of 

the implied warranty. Those who hold themselves out 

as builders must be just as accountable for the 

workmanship that goes into a home . . . as are 

builder-developers. 

Moxley, 600 P.2d at 735. 

¶14 We therefore conclude that Reliance gave an implied 

warranty of workmanship and habitability, even though it was not 

also the vendor of the condominiums. We next turn to the issue 

of whether suit on this warranty can be brought by residential 

homebuyers, like those in the Association, who had no direct 

contractual relationship with the builder. 

C. 

¶15 The courts below held that Richards abrogated the 

common law requirement of privity in contract actions only when 

the builder of the new home is also the vendor. We disagree. 

¶16 We stressed in Richards that, given the policies 

behind the implied warranty – to protect innocent buyers and 

hold builders responsible for their work – “any reasoning which 
10

would arbitrarily interpose a first buyer as an obstruction to 

someone equally deserving of recovery is incomprehensible.” 139 

Ariz. at 245, 678 P.2d at 430 (quoting Moxley, 600 P.2d at 736). 

We also noted that such a rule “might encourage sham first sales 

to insulate builders from liability.” Id. And, we emphasized 

that the character of our society is such that people 

and families are increasingly mobile. Home builders 

should anticipate that the houses they construct will 

eventually, and perhaps frequently, change ownership. 

The effect of latent defects will be just as 

catastrophic on a subsequent owner as on an original 

buyer and the builder will be just as unable to 

justify improper or substandard work. 

Id. 

¶17 Identical concerns guide us today. In today’s 

marketplace, as this case illustrates, there has been some shift 

from the traditional builder-vendor model to arrangements under 

which a construction entity builds the homes and a sales entity 

markets them to the public. In some cases, the builder may be 

related to the vendor; in other cases, the vendor and the 

builder may be unrelated. But whatever the commercial utility 

of such contractual arrangements, they should not affect the 

homebuyer’s ability to enforce the implied warranty against the 

builder. Innocent buyers of defectively constructed homes 

should not be denied redress on the implied warranty simply 
11

because of the form of the business deal chosen by the builder 

and vendor.3

D. 

¶18 Reliance argues that failure to require privity in 

implied warranty actions will expose residential homebuilders to 

expanded liability and disrupt an important sector of the 

Arizona economy. But homebuilders who do not sell directly to 

the public already are liable for defective construction. As 

noted above, builders have long been directly liable to those 

with whom they contract for breach of the implied warranty of 

good workmanship. Therefore, a developer-vendor sued for 

defective construction will typically seek indemnity from the 

builder; such a defendant may also choose to assign his claim 

against the builder to the plaintiff. See Webb v. Gittlen, 217 

Ariz. 363, 364 ¶ 6, 174 P.3d 275, 276 (2008) (noting that 

unliquidated non-personal injury claims are generally 

                                                           

3

 We have no occasion today to decide whether privity is a 

requirement for enforcement of implied warranties in the context 

of non-residential construction. See Hayden Bus. Ctr. Condos. 

Ass’n v. Pegasus Dev. Corp., 209 Ariz. 511, 513 ¶ 14, 105 P.3d 

157, 159 (App. 2005) (declining to allow subsequent purchasers 

of commercial buildings to sue for breach of the implied 

warranty of good workmanship). We disapprove Hayden Business 

Center, however, to the extent that it rests on the premise that 

the Richards exception applies only to homebuilders who are also 

vendors. Id. ¶ 12. 
12

assignable). Our decision today thus does not impose liability 

on builders where none existed in the past.4

¶19 Reliance also argues that failure to require privity 

will chill salutary attempts between developers and builders to 

allocate responsibility for contract damages arising out of 

construction defects. But nothing in our opinion today prevents 

or discourages such agreements; we hold only that the 

Association may bring suit directly against Reliance. Reliance 

may not rely upon an agreement it has with the Developer 

respecting allocation of eventual responsibility for defective 

construction to escape its obligations to the Association on the 

implied warranty.5

III. 

¶20 For the foregoing reasons, we hold that the superior 

court erred in dismissing the Association’s implied warranty 

claim for lack of privity. We therefore vacate the opinion of 

                                                           

4

 Arizona law also provides builders with protections against 

actions by those claiming construction defects. See A.R.S. §§ 

12-1361 to -1366 (requiring putative plaintiffs to give builders 

notice and an opportunity to repair defective construction); id.

§ 12-552 (imposing eight-year statute of limitations from 

substantial completion of the dwelling, regardless of whether 

defective construction is discovered during that period). 

5

 We recognize that if the developer-vendor is financially 

unable to satisfy a judgment for breach of the implied warranty, 

the builder may be left with the entire monetary responsibility, 

notwithstanding any allocation agreements. But under such 

circumstances, the costs of remedying defective construction 

most appropriately fall on the builder, rather than on innocent 

end users. 
13

the court of appeals, reverse the judgment of the superior 

court, and remand to the superior court for further proceedings 

consistent with this opinion.6

 

 _______________________________________ 

 Andrew D. Hurwitz, Justice 

CONCURRING: 

_______________________________________ 

Ruth V. McGregor, Chief Justice 

_______________________________________ 

Rebecca White Berch, Vice Chief Justice 

_______________________________________ 

Michael D. Ryan, Justice 

_______________________________________ 

W. Scott Bales, Justice 

                                                           

6

 Both parties seek attorneys’ fees pursuant to A.R.S. § 12-

341.01(A). We decline to award fees because the eventual 

successful party has not yet been determined.