The Lofts at Fillmore Condominium Association v. Reliance Commercial Construction, Inc.
At a Glance
| Parties | A condominium association sued a builder for construction defects even though the builder was not the seller of the units. |
|---|---|
| Panel | Justice Andrew D. Hurwitz, Chief Justice Ruth V. McGregor, Vice Chief Justice Rebecca White Berch, Justice Michael D. Ryan, Justice W. Scott Bales |
Summary
Lofts at Fillmore is an important Arizona Supreme Court case for condominium associations pursuing construction-defect claims. The builder argued that it could not be sued for breach of the implied warranty of workmanship and habitability because it did not directly sell the units to the buyers and had no contractual privity with the association. The court rejected that argument. It held that the implied warranty arises from the construction of the home, not just from the sale transaction, and that lack of direct contractual privity does not bar the claim. In other words, a builder who actually performed the work can still be accountable even if a separate developer owned and sold the property. For condominium projects, that means an association may have a direct path against the builder whose work caused the defects instead of being limited to claims against the developer-vendor alone.
Holding
A builder who is not also the vendor of the residence may still be sued for breach of the implied warranty of workmanship and habitability; lack of contractual privity does not bar the claim.
Reasoning
The court emphasized the policy behind the implied warranty doctrine: protect innocent residential purchasers and hold builders responsible for their work. Those purposes would be undermined if a builder could avoid liability merely because a separate entity held title and handled the sales.
The court also grounded the warranty in the act of building. Arizona’s earlier cases had already moved away from caveat emptor in new-home construction. Extending the warranty to the non-vendor builder fit that existing line of authority and prevented form-over-substance avoidance of liability.
Why This Matters for HOAs
This case is a powerful tool for Arizona condo associations and, by extension, many HOA construction-defect plaintiffs. It helps associations sue the party that actually did the defective work instead of being boxed into claims only against the original seller.
Developers, builders, and HOA counsel still cite Lofts in almost every Arizona construction-defect standing or privity fight. It remains a practical, high-value precedent for associations dealing with major repair claims.
