Arizona Court Of Appeals Division One Holds That A Subsequent Purchaser Of Commercial Property Can Sue For Breach Of The Implied Warranty Of Workmanship And Habitability Pursuant To An Express Assignment Of That Warranty By The Original Owner.

Bradbury & Stamm Construction Company built an apartment complex in Flagstaff for College Partners Limited Partnership.  Several years later, College Partners sold the apartment complex to Highland Village.  College Partners expressly assigned to Highland all warranties relating to contractors of the complex.  Highland then filed suit against Bradbury & Stamm “for breach of the implied warranty of workmanship and habitability, alleging various defects, including improper flashing and improper installation of siding.”  The trial court granted summary judgment for Bradbury & Stamm, concluding that, because Highland lacked privity of contract with Bradbury & Stamm, “any claim for breach of the implied warranty belonged exclusively to College Partners.”  Highland appealed. 

The Arizona appeals court reversed.  In rejecting the trial court’s reasoning, the court noted that the trial court had relied primarily on Hayden Business Center Condominiums Association v. Pegasus Development Corp., 209 Ariz. 511, 105 P.3d 157 (App. 2005), which held that the privity requirement applied to commercial property (although it does not apply to residential property).  Hayden, however, did not involve an express assignment of warranties by the original owner of the commercial property.  Because warranties generally can be assigned, like most other contractual rights, the court concluded that there was no reason precluding commercial sellers from expressly assigning their implied warranties of workmanship and habitability. 

Judge Timmer authored the opinion; Judges Norris and Brown concurred.