What Is This Clause?
A clause in a new construction purchase agreement that asks the buyer to give up (waive) the implied warranty of habitability. This warranty is a legal principle that says a newly built home should be safe, structurally sound, and fit for someone to live in.
How It Works
In many states, the law automatically provides an implied warranty of habitability when you buy a new home. This means even if the contract doesn't mention it, the builder is legally required to deliver a home that meets basic livability standards — working plumbing, sound structure, weatherproof exterior, and safe electrical systems.
A habitability waiver clause attempts to remove this protection. If enforceable, it means the builder has no legal obligation to deliver a home that is actually livable. The buyer's only recourse would be through the builder's own express warranty, which is typically much more limited in scope and duration.
These waivers are most commonly found in large production builder contracts. They are often buried in dense legal language and may not be immediately obvious to buyers reading the agreement.
Why It Matters
Without the implied warranty, the builder has no legal obligation to deliver a home that meets basic livability standards beyond what's explicitly stated in the express warranty.
If your home has a major structural defect, a habitability waiver may eliminate your strongest legal remedy.
Even if you discover the home is uninhabitable at closing, the waiver may prevent you from seeking damages beyond the original purchase price.
Real-World Cases
Smith v. D.R. Horton, Inc. (South Carolina, 2016)
The South Carolina Supreme Court found D.R. Horton's habitability waiver unconscionable, ruling that the extreme imbalance of bargaining power between a national builder and individual homebuyers made the waiver unenforceable.
Damico v. Lennar Carolinas (South Carolina, 2022)
The South Carolina Supreme Court found the builder's purchase agreement was a contract of adhesion that buyers had no meaningful ability to negotiate. The court held that provisions limiting buyer remedies were unconscionable.
Which Builders Use This Clause
The following builders have been documented using this clause type in their purchase agreements.
State-by-State Enforceability
Enforceability varies significantly by state. Some states (like South Carolina) have found these waivers unconscionable. Others (like Texas) do not have a statutory implied warranty of habitability for new construction, making the waiver largely moot. Many states fall somewhere in between, with enforceability depending on specific contract language and circumstances.
What Buyers Can Do
- 1Ask whether the implied warranty of habitability is waived in your purchase agreement.
- 2Research whether your state recognizes an implied warranty of habitability for new construction.
- 3If your state protects this warranty and the contract waives it, the waiver may not be enforceable — but consult a local attorney to be sure.
- 4Consider requesting that the waiver be struck from the contract before signing. The builder may refuse, but the request is worth making.
- 5Have your contract scanned by an independent review service to identify this and other clauses that may affect your rights.