Builder Liability or Developer Liability
Condominium associations often sue developers for construction defects. But can they sue the builder, even though the builder did not sell any of the units directly to the condominium owners? According to 1324 W. Pratt Condominium Association v. Platt Construction Group, (2010 Ill. App. LEXIS 1030), the answer is yes.
In this recent court decision, the builder built an 8-unit residential building for a developer, who then sold the units to individual owners. The individual owners eventually found out that the building (and their personal property) was damaged due to water leaking in from the roof. The condominium association then sued the developer, the builder, and the roofer.
The builder claimed he should not be held liable, since he sold the building to the developer, not to the individual unit owners. The court, however, disagreed, and held that the builder could be liable under the implied warranty of habitability, regardless of whether or not he sold units directly to condominium owners. Even though the unit owners had no direct contract with the builder, they could sue him.
Previously, courts in Illinois held that if there was no direct connection between the builder and individual unit owners, the builder could not be held liable. Whether these cases can be reconciled with the Pratt decision remains to be seen.
You should also note that when the builder/general contractor is insolvent or bankrupt Illinois law provides that the subcontractors can be sued for breach of the implied warranty of habitability. Privity of contract is unnecessary.