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In the Spotlight: What Are You Implying?

BY Joseph E. Rubas
November 25, 2013

The words “implied warranty of habitability” usually give lessors a headache. Most lessors have run across the implied warranty of habitability during a dispute with a tenant of a residential property. This implied warranty may be raised by a tenant seeking to offset rent, which is owed because the tenant claims that a substantial defect renders the premises unsafe or unsanitary. The warranty is implied as a matter of law in all contracts for the lease of residential properties. Jack Spring, Inc. v. Little, 50 Ill.2d 351, 280 N.E.2d 208 (1972); Pole Realty Co. v. Sorrells, 84 Ill.2d 178, 417 N.E.2d 1297 (1981).

Sometimes, however, it is the lessor who is raising the issue of implied warranties. When a lessor decides to build or improve property and hires a contractor, the lessor may find himself in the position of trying to include contract terms so that he, as the property owner, can enforce such implied warranties against a contractor.

The negotiation of clauses in construction contracts dealing with implied warranties tends to draw a lot of heated dispute between the property owner and the contractor, often because neither side really understands what is at stake. The contractor insists on a limited express warranty provision, which is then followed by a provision stating that the owner waives all “implied” warranties. In response, the owner insists that the express warranties be in addition to any implied warranties. However, lost somewhere in the stalemate is an expression of what specific implied warranties are being offered or given up. This article helps explain the implied warranties that arise in a construction project as well as the impact of contract clauses addressing such implied warranties.

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