Harbour Gate Owners' Ass'n, Inc. v. Berg

• Decision Date: 05 September 1986
• Docket Number: No. 822155,822155
• Citation: 348 S.E.2d 252,232 Va. 98
• Court: Virginia Supreme Court
• Parties: HARBOUR GATE OWNERS' ASSOCIATION, INC., et al. v. Max BERG, et al. Record

Page 252

348 S.E.2d 252

232 Va. 98

HARBOUR GATE OWNERS' ASSOCIATION, INC., et al. v. Max BERG, et al.

Record No. 822155.

Supreme Court of Virginia.

Sept. 5, 1986.

John G. Crandley (Preston, Wilson & Crandley, Virginia Beach, on briefs), for appellants.

Linda Laibstain (John Franklin, III, James A. Gorry, III, Robert C. Nusbaum, Hofheimer, Nusbaum, McPhaula & Brenner, Taylor, Walker and Adams, Norfolk, on brief), for appellees.

Present: All the Justices.

RUSSELL, Justice.

This appeal presents questions concerning the effective dates of the warranty on the common elements of a condominium project required by Code § 55-79.79(b). We must also determine the limitation period affecting an action for the breach of such a warranty.

In August 1973, the developers of the Harbour Gate Condominium in Virginia Beach (the developers) established the project by recording a master deed pursuant to the Horizontal Property Act, Code §§ 55-79.1 through 55-79.38. Construction of the project began in 1973 and reached substantial completion in December 1975. The first condominium unit was conveyed to an individual purchaser on March 22, 1976. Approximately 120 additional conveyances of units were made through the spring of 1978. All the conveyances were by customary general warranty deeds with English covenants of title. They conveyed to each purchaser fee simple title to his unit together with an undivided interest in the common elements of the condominium.

The deeds contained no express warranties concerning structural defects, workmanlike construction, or fitness for habitation. Nevertheless, on July 1, 1974, during the period of construction and before the first unit had been conveyed, the Condominium Act (Code §§ 55-79.39 through 55-79.103) became effective. The Condominium Act expressly superseded the Horizontal Property Act as of July 1, 1974, but continued the Horizontal Property Act in effect with respect to the validity of condominium instruments recorded before that date. Code § 55-79.40. See Chesapeake House on the Bay, Inc. v. Virginia National Bank, 231 Va. 440, 442, 344 S.E.2d 913, 915 (1986).

The Condominium Act included Code § 55-79.79(b) which provides: ¹

Notwithstanding anything in this section to the contrary, the declarant shall warrant or guarantee, against structural defects, each of the units for two years from the date each is conveyed, and all of the common elements for two years. In the case of each unit the declarant shall also warrant that the unit is fit for habitation and constructed in a workmanlike manner so as to pass without objection in the trade. The two years referred to in this subsection shall begin as to each of the common elements whenever the same has been completed or, if later, (1) as to any common element within any additional land or portion thereof, at the time the first unit therein is conveyed, (2) as to any common element within any convertible land or portion thereof, at the time the first unit therein is conveyed, and (3) as to any common element within any other portion of the condominium, at the time the first unit therein is conveyed. For the purposes of this subsection, no unit shall be deemed conveyed unless conveyed to a bona fide purchaser. Any conveyance of a condominium unit transfers to the purchaser all of the declarant's warranties against structural defects imposed by this subsection. For the purposes of this subsection, structural defects shall be those defects in components constituting any unit or common element which reduce the stability or safety of the structure below accepted standards or restrict the normal intended use of all or part of the structure and which require repair, renovation, restoration, or replacement. Nothing in this subsection shall be construed to make the declarant responsible for any items of maintenance relating to the units or common elements.

On April 27, 1978, damage was discovered in the roof, a common element, of the condominium. Harbour Gate Owners Association, Inc., the condominium unit owners' association, filed this action for damages against the developers, architects, general contractors, and roofing subcontractors, alleging that the roof contained latent structural defects not discovered until April 1978. The plaintiff claimed that these defects breached the statutory warranties required by the Condominium Act. The original motion for judgment was filed December 3, 1979. On August 8, 1980, an amended motion for judgment was filed, in which four individual unit owners joined the association as additional plaintiffs. On July 29, 1981, a second amended motion for judgment was filed, in which ten unit owners joined with the association as plaintiffs. The defendant developers filed a plea of the statute of limitations. The plaintiffs took a nonsuit as to the architects and contractors, and the case proceeded as a contest between purchasers and developers.

The court held that the right of action for breach of warranty under Code § 55-79.79(b) had accrued when the first unit was sold on March 22, 1976; that the applicable period of limitation was three years, governing contracts not in writing (Code § 8.01-246(4)); and that this action, having been instituted more than three years after the date of conveyance of the first unit, was time-barred. We granted an appeal from the court's order sustaining the plea of the statute of limitations.

A. EFFECT OF THE CONDOMINIUM ACT

Notwithstanding their success in the trial court, the developers argue that there is no indication in the Condominium Act that the legislature intended to give Code § 55-79.79(b) a retrospective application so as to impose its warranties upon parties whose rights and duties were already fixed by condominium instruments recorded under the Horizontal Property Act before the Condominium Act took effect. They assign cross-error to the trial court's implicit holding that Code § 55-79.79(b) affects the Harbour Gate Condominium and contend that the common-law rule of caveat emptor applies except for manufacturers' warranties on equipment and appliances.

The Condominium Act provides, in Code § 55-79.40: "This chapter shall apply to all condominiums and to all horizontal property regimes or condominium projects." That section also makes the former terminology used by the Horizontal Property Act equivalent to corresponding new terminology adopted by the Condominium Act. It further provides that the Condominium Act supersedes the Horizontal Property Act but that the validity of condominium instruments recorded under the Horizontal Property Act would be unaffected. The Horizontal Property Act was not repealed, and remains a part of the Code.

The language of Code § 55-79.40 demonstrates a clear legislative intent to apply the provisions of the Condominium Act to all horizontal property regimes in existence on July 1, 1974. The provisions of the Condominium Act are generally remedial in character, and such legislation may, where the legislative intent to do so is clear, be applied retrospectively, subject to well-defined limitations. Walke v. Dallas, Inc., 209 Va. 32, 161 S.E.2d 722 (1968). Although new legislation will ordinarily not be construed to interfere with existing contracts, rights of action, suits, or vested property rights, Gloucester Realty Corp. v. Guthrie, 182 Va. 869, 874-75, 30 S.E.2d 686, 688 (1944), the developers here make no contention that any contracts for the sales of units were in existence on July 1, 1974, or that any vested property rights were disturbed by the statutory requirement that warranties be given on conveyances made after the effective date of the Condominium Act. We conclude that the warranty provisions of Code § 55-79.79(b) may apply to conveyances of units in horizontal property regimes made after July 1, 1974, and that the trial court did not err in holding the warranties applicable here.

B. THE WARRANTY PERIOD

The purchasers, in an ingenious argument, contend that the warranty statute required the developers to warrant or guarantee the roof for a period of two years from the date of completion of the project or conveyance of the first unit, whichever occurred later, and that in this case March 22, 1976, the date of conveyance of the first unit, was the later date; that the statute contemplated that the warranty would be "read as an express provision of each deed transferred within two years of March 22, 1976"; that each deed recorded between March 22, 1976 and March 22, 1978 thus should be read to include the express statutory warranty; that the two-year period mentioned in the statute regulated only the duration of the warranty period, not the limitation period for filing actions for breach; that the applicable period of limitations was the five-year period governing written contracts under former Code § 8-13; thus, this action was brought well within the limitation period. Even if the limitation period is three years, say the purchasers, any purchaser who received a deed between December 3, 1977 (three years before suit was filed) and March 22, 1978 (the end of the warranty period) would not be barred. This result must follow, the purchasers contend, because the warranty continued from March 22, 1976 to March 22, 1978 and was a part of all deeds issued during that period; that it was breached by defective construction ab initio, which breach continued throughout the warranty period; and that each purchaser whose deed was delivered during the warranty period acquired a right of action for the breach which accrued when the deed was delivered. Thus, the purchasers say, their action was timely filed.

We do not agree with the purchasers' analysis of Code § 55-79.79(b). That section provides that "the declarant shall warrant or guarantee, against structural defects, ... all of the common elements for two years.... The two years ... shall begin as to each of the common elements whenever the same has been completed...