Owner Beware: No "Third Party Beneficiary" Status
A recent case out of Division II highlights the rather precarious position occupied by the Owner in a turnkey project delivery -- whether commercial or residential: you can't sue remote contractors or trades because you are generally not considered to be a "third party beneficiary" of your seller's contracts with the firms that actually built your home or facility. That leaves the Owner's remedies limited to whatever the purchase and sale agreement may provide, not what the underlying construction contracts may provide.
In Warner v. Design and Build Homes, Inc., the Owner sued because of structural defects and mold growth in the home. As against the seller, the suit was barred because of an "as is" clause in the contract which Division II held to be enough to disclaim the implied warranty of habitability under Washington law.
Lacking recourse against the seller, the Owner also attempted to bring a direct claim against one of the seller's subcontractors, the stucco applicator. But the Court held the Owner was not an intended beneficiary of this subcontract and thus dismissed the Owner's claim on summary judgment.
An Owner in a turnkey project wishing to avoid a similar fate will negotiate for one of two fixes to this problem -- either an assignment of rights putting the Owner into the shoes of the seller for purposes of bringing such claims, or a new clause in the contract specifically naming Owner as a "third party beneficiary" of the seller's construction agreements with the trades.