East Hilton Drive Homeowners' Ass'n v. Western Real Estate Exchange, Inc.

Opinion

GIRARD, J.

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T. J. Culligan, owner and developer of a tract of land in Santa Cruz, had a Mr. Kuehl build eight condominiums on that land, five of which are the subject of the instant litigation. A foreclosure resulted in the acquisition of the condominiums by the Bank of America. The condominiums were purchased from the Bank of America by appellant Western Real Estate Exchange, Inc. in late 1976 or early 1977, some four years after their construction. The condominiums were sold to their first occupants by Western, after repairing and rehabilitating them. Western also secured a certification from Kuehl that the buildings were constructed in accordance with the Building Code. Western found mildew in one of the garages, as well as several sacks of water sealer. After consulting with an engineer and county officials, Western excavated behind the buildings and built a drain field behind the foundation, after sealing the rear of the walls of four units (two buildings) with tar.

The condominiums were sold by Western to respondents in May and June of 1977. The units had been vacant from the date of their construction until they were purchased by respondents. At least one purchaser knew that they had lain vacant for some years. When the units were purchased, the

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area had suffered a drought. During the rain of the latter part of 1977, the walkways sloping towards the buildings flooded. Water appeared in the garages. Sheetrock peeled off walls, mildew appeared, and carpets were destroyed.

Respondents expended some $6,500 to remedy the water problem. An additional amount of $19,400 is needed to reset surface goods and replace improperly installed concrete. Two of the respondents incurred damages because of rental losses and floor damage in an amount of $1,275.

Landscaping in an amount of $8,800, which appellant agreed to do, has not been done. Appellant concedes that this is a legitimate obligation.

The lower court found that appellant impliedly warranted to respondents that the homes they purchased were or would be constructed in a reasonably workmanlike manner and were reasonably fit for habitation. It then found that Western breached the implied warranty of fitness and assessed total damages of $34,555, with interest of $6,355 thereof until the date of judgment.