Implied warranty of habitability enforced despite disclaimer
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The Court of Appeals evaluated the limited warranty that disclaimed any implied warranty of habitability. The court noted that under prior Washington case law, the warranty of habitability arises by implication from the transaction itself and is independent of the terms of the sales contract. Washington law requires a disclaimer of such implied warranties to be (1) conspicuous, (2) known to the buyer, and (3) specifically bargained for. The court concluded that those elements were not met and held that the disclaimer was ineffective.

The Burbo court next considered Douglass’s argument that it did not breach the warranty of habitability because despite the claimed defects, the house was still fit for occupancy. The court concluded that a house did not have to be literally falling down before the implied warranty of habitability was breached, and it concluded that the wide assortment of defects at issue here could render it uninhabitable. The defects arose from bad construction that violated many aspects of the building code. Because this was a disputed question of fact for the jury, the trial court erred in dismissing the case on summary judgment.

The Court of Appeals then considered whether Burbo had raised issues of fact to defeat summary judgment of dismissal of his claim of fraudulent concealment. There was evidence that Douglass actually knew of the substandard and illegal quality of the construction. Douglass visited the house while it was being built and observed the construction practices. The Burbo court held that this was enough to defeat summary judgment on this claim, and the trial court erred in dismissing it.

The court also considered whether Burbo’s proof of a Consumer Protection Act violation was sufficient to go to a jury. The court held that the same facts that supported fraudulent concealment also showed “unfair or deceptive acts” under the CPA. The Act also requires proof of an impact on the public interest. The Court of Appeals found that proof here because the defective home was marketed to the public through the local multiple listing service.