DONALDSON, Justice.
Tusch Enterprises appeals from an order of the district court granting summary judgment in favor of Robert and Elizabeth Vander Boegh, husband and wife, and Rex T. Coffin. Tusch Enterprises brought this action after discovering that residential duplexes it had recently purchased suffered from major structural infirmities. The complaint advanced the following theories of recovery: (1) negligence, (2) misrepresentation, (3) express warranty, and (4) implied warranty of habitability. We reverse the entry of summary judgment as to the misrepresentation and implied warranty of habitability counts.
I
Facts
We present the facts in the light most favorable to Tusch Enterprises. Robert Vander Boegh, a man with considerable experience in the road construction business, and his wife owned land in Pocatello, Idaho, and decided to build three duplexes. The rolling foothill upon which the duplexes were to be built was levelled for construction by Bengal Construction. The Vander Boeghs then contracted with Rex Coffin, a building contractor, to erect the duplexes. Pursuant to their agreement, Coffin was to prepare plans for the duplexes, secure all the necessary building permits, and build the structures. The site preparation and the outside work, such as gutters, lawns, curbs, and grading, were [39]*39left to Robert Vander Boegh to do, or to contract out.
Coffin began working on the site in the fall of 1975. In his deposition, he describes some difficulties he encountered in securing a permit:
“Q. Did you have questions in your mind at that time whether or not it was a suitable site for constructing duplexes on?
“A. When I talked to the city, they were quite reluctant, I’ll say, they seemed to have a grudge against Bob [Vander Boegh]. And so I talked to Bob and asked him about it, and I said, ‘Are we looking at any fill?’ And he said, ‘No, this is all cut.’ And I took the message back to them, because it was all cut out of the mountainside there. And I discussed that with Mr..Mason and those fellows, and after quite a hassle we got the permit.”
Throughout his deposition, Coffin testifies that Robert Vander Boegh told him the site had been cut from the mountain, and that no fill dirt had been used. The presence of fill dirt is significant because it tends to compact more and is thus more likely to cause foundations to settle and crack. During construction, Coffin became concerned enough about the “softness” of the soil where the south duplex was to be built that he asked a building inspector to investigate. Coffin testifies that the softness was brought to Vander Boegh’s attention:
“A. ... And what brought it up was there was a little indication of a little softness there, and so we started digging to make sure that there was not anything that would indicate fill or anything like that____
“Q. You mentioned a conversation with Bob [Vander Boegh] regarding this problem. What was that?
“A. Well, when we dug down, Bob and I talked it over, and I showed him where we were. We talked it over as owner and contractor and we decided that this would be. And I wanted his professional opinion, too, on it.
Q. Now, what exactly was the content of the conversation?
“A. Well, we were just looking the job over and passing the time of day and I told him about this little area there that I had to question. And I went way beyond the ordinary to make sure that it was proper and right.”
Robert Vander Boegh testifies in his deposition as to his version of the conversation regarding soft soil at the south duplex site:
“A. Yes. On one weekend Rex had called me up and wanted me to meet — I lived right next door, and if I remember correctly he had the footings constructed for the two duplexes. Now, on the third one in question, [the south unit,] he had that all excavated and on the far end that settled he was down, I’d say, two feet further than he normally would have had to go, and he said it looked to him like there was some question if he was down to original ground, and I agreed with him, that it didn’t look original to me. And this is hard to tell. So I told Rex to do whatever he had to do to get the footings down, and he volunteered that he would dig it by hand just as far as he had to go to put that footing in.
“Q. As I understand what you are saying, that you indicated to him it does look like there is fill, do what you have to do to take care of it?
“A. That’s correct.”
In early 1976, after the duplexes were completed, the Vander Boeghs began renting out the duplex apartments. Later, they listed the properties for sale with a realtor. Marianne Tusch learned of the listing at the agency where she worked as a real estate agent. She and a number of her relatives were interested in purchasing the duplexes as investment property. They formed a partnership, Tusch Enterprises, for that purpose.
[40]*40On June 7, 1978, Tusch Enterprises offered to purchase the duplexes for $125,-000. The offer was rejected. During this time period, Marianne Tusch met with Robert Vander Boegh and his realtor. In her deposition, Marianne Tusch testifies that Vander Boegh informed her he worked for a construction company, had access to site preparation equipment, and had participated in the site preparation. She also testifies that Vander Boegh stated the buildings were of “good quality construction.” By affidavit, she asserts that she relied upon these representations. On June 15, 1978, a second offer of about $140,000 was communicated to the Vander Boeghs. Vander Boegh told Marianne Tusch that he would either accept the second offer or take the property off the market. He chose the latter.
Sometime later, the duplexes were re-listed. Tusch Enterprises became aware of this, and on March 27, 1979, submitted an offer of $140,000. The Vander Boeghs accepted this third offer, though it was substantially the same as the one they had rejected only nine months earlier.
Prior to purchasing the units, Tusch Enterprises had inspected them and noticed no major defects. However, about one month after purchasing the duplexes, Tusch Enterprises discovered from a tenant that the south unit was having problems. The walls had begun cracking around the windows and many of the doors would not close properly. Further investigation revealed that the foundation was cracking. Geotechnical and construction experts have submitted affidavits and testified by deposition of their opinion that the foundation had been partially constructed on fill dirt, which had compacted causing the foundation to settle and crack. They are of the opinion that the foundation was improperly constructed given the fill dirt conditions.
Marianne Tusch testifies in her deposition that she was not told of the fill dirt conditions, or of the possible problems with the foundation. She further testifies that one of the cracks in the south unit appeared to have been filled in, or patched, with cement. After discovering the problems with the foundation, Tusch Enterprises learned from the Vander Boeghs that Coffin had actually constructed the duplexes and attempted, without success, to discuss the problems with Coffin. Tusch Enterprises expended a great deal of money remedying the problems. The structural defects have caused damage to the duplexes themselves and to the parking lot, and have caused losses in rental income, but Tusch Enterprises has suffered no personal injuries and has suffered no damage to property other than that which was the subject of the duplex sales transaction.
Suit was filed against the Vander Boeghs and Coffin to seek compensation for these structural defects. Tusch Enterprises alleged negligence, misrepresentation, express warranty, and implied warranty and prayed for damages for loss of rental value and costs of repair. The case was before a number of district judges at different stages, and eventually summary judgment was entered against Tusch Enterprises as to all four theories of recovery.
Before addressing those decisions, we recall the standard by which motions for summary judgment are reviewed. It is our task to review the record before the court below, including the pleadings, depositions, admissions, and affidavits, if any, and to determine de novo whether, after construing the facts in the light most favorable to the nonmoving party, there exist any genuine issues of material fact and whether the successful movant below is entitled to judgment as a matter of law. Pincock v. Pocatello Gold & Copper Mining Co., Inc., 100 Idaho 325, 597 P.2d 211 (1979). See also, I.R.C.P. 56(c).
II
Negligence
Tusch Enterprises alleges negligence on the part of the Vander Boeghs and Coffin in the design and construction of the duplexes. However, the only damages it alleges are lost rental income and property damage to the duplexes and the parking lot. These losses are economic:
[41]*41“Economic loss includes costs of repair and replacement of defective property which is the subject of the transaction, as well as commercial loss for inadequate value and consequent loss of profits or use.” Salmon Rivers Sportsman Camps, Inc. v. Cessna Aircraft Co., 97 Idaho 348, 351, 544 P.2d 306, 309 (1975).
In Clark v. International Harvester Co., 99 Idaho 326, 581 P.2d 784 (1978), we had to decide whether the purchaser of a defective product who has suffered only economic losses may recover those losses in a negligence action against the manufacturer. We ruled that purely economic losses are not recoverable in negligence. Other courts have criticized limiting the negligence theory in this manner. See, e.g., Council of Co-Owners v. Whiting-Turner, 308 Md. 18, 517 A.2d 336, 344-45 (1986), and the cases cited therein. These courts argue that the distinction between economic and other loss is arbitrary. However, as we explained in Clark with the words of Justice Traynor, in our view
“[t]he distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the ‘luck’ of one plaintiff in having an accident causing physical injury. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. He can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. He cannot be held for the level of performance of his products in the consumer’s business unless he agrees [expressly or impliedly] that the product was designed to meet the consumer’s demands.” Clark, supra, 99 Idaho at 334, 581 P.2d at 792, quoting Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 23, 403 P.2d 145, 151 (1965). (Addition ours.)
“The economic expectations of parties have not traditionally been protected by the law concerning unintentional torts. [Citations.] We do not believe that any good purpose would be achieved by undermining the operation of the UCC provisions [and other contract principles] by extending tort law to embrace purely economic losses in product liability cases.” Clark, supra, 99 Idaho at 335, 581 P.2d at 793.
We adhere to the view expressed in Clark, and, accordingly, affirm the decision of the court below dismissing Tusch Enterprises’ negligence claims.
Ill
Misrepresentation
In its complaint, Tusch Enterprises alleges misrepresentation on the part of Robert Vander Boegh. Tusch Enterprises directs the court’s attention to Faw v. Greenwood, 101 Idaho 387, 613 P.2d 1338 (1980), and argues that the elements of misrepresentation outlined therein have been satisfied. The elements are as follows:
“(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person and in the manner reasonably contemplated; (6) the hearer’s ignorance of its falsity; (7) his reliance on the truth; (8) his right to rely thereon; and (9) his consequent and proximate injury.” Id., at 389, 613 P.2d at 1340, quoting Mitchell v. Siqueiros, 99 Idaho 396, 401, 582 P.2d 1074, 1079 (1978).
We do not believe Tusch Enterprises’ misrepresentation claim should be analyzed only with reference to the elements recited in Faw, supra.1 It must also be considered [42]*42whether the facts here fall within the category of cases finding a misrepresentation on the basis of nondisclosure.
We addressed the instances where nondisclosure may amount to misrepresentation in Bethlahmy v. Bechtel, 91 Idaho 55, 415 P.2d 698 (1966). In Bethlahmy, the defendant, Bechtel, was the builder and vendor of a residential home. Bechtel told the plaintiffs that the houses he built were the finest, and that the house at issue was of first quality construction. However, Bechtel did not disclose to the plaintiffs that a tiled water line ran underneath the garage and to within seven or nine feet of the north wall of the residence.. We explained plaintiffs’ cause of action:
“Plaintiffs commenced this action for rescission and restitution, mainly on the ground of defendants’ failure to disclose the defective condition of the house. The presence of the unsealed irrigation ditch through the lot and beneath the garage, coupled with the fact that the basement was not of waterproof construction, constituted major defects, known to defendants, and unknown to plaintiffs, and not discoverable upon reasonable inspection. Failure to disclose such defects would support a finding of fraud.” Id., at 59, 415 P.2d at 702.
Relying upon § 551 of a tentative draft of the Restatement (Second) of Torts,2 the court found that the plaintiffs had presented facts entitling them to relief:
“Defendant did not testify that he called attention to, or advised plaintiffs of, the ditch running under the lot and garage; nor that the ditch was constructed of drainage tile without sealed joints; nor that the basement was not of waterproof construction. These facts were known to defendant and unknown to plaintiffs. They were not discoverable by inspection. Defendant had superior knowledge. Plaintiffs were ignorant of the facts. The parties did not deal at arms length. Defendant dealt from a position of superior knowledge. A confidential relationship arose between the parties. Stearns v. Williams, 72 Idaho 276, 288, 240 P.2d 833 (1952). Plaintiffs relied, and were entitled to rely, upon defendant’s representation that the house would be a quality home. The facts essential to a finding of constructive fraud ... are not in dispute.” Id., at 62, 415 P.2d at 705.
The rationale for recognizing such a cause of action was explained in Bethlahmy with the following quotation from Kaze v. Compton, 283 S.W.2d 204, 207 (Ky. 1955):
“It cannot be controverted that actionable fraud or misrepresentation by a vendor may be by concealment or failure to disclose a hidden condition or a material fact, where under the circumstances there was an obligation to disclose it during the transaction. If deception is accomplished, the form of the deceit is immaterial. And the legal question is not affected by the absence of an intent to deceive, for the element of intent, whether good or bad, is only important as it may affect the moral character of the representation.” Bethlahmy, supra, 91 Idaho at 60, 415 P.2d at 703.
[43]*43Kaze v. Compton explained that actual intent to deceive need not be shown where the seller knew of facts which would have apprised a person of ordinary prudence of the truth: if a reasonable person would have been so apprised, and the seller was under a duty to inform the buyer of the concealed facts, then intent to deceive is not necessary to make a prima facie showing. Kaze, supra, at 208.
After his conversation with Coffin, Vander Boegh knew, or should have known, that the south duplex was, at least partially, built upon fill dirt. A person of ordinary prudence with a background similar to Vander Boegh’s (e.g., with extensive road construction experience and knowledge of compaction), who knew of the fill dirt would have been apprised of the truth (e.g., that problems with the foundation were likely). Yet, by Tusch Enterprises’ account, Vander Boegh did not disclose the fill dirt problems, and, instead, assured Marianne Tusch that the duplexes were quality dwellings. The soil problem, like the ditch in Bethlahmy, was not a patent defect. Finally, although it may be proven that Tusch Enterprises has greater expertise than the average home buyer when it comes to evaluating homes, because this case is before us from an order granting summary judgment, we must assume that, like the buyers in Bethlahmy, Tusch Enterprises did not deal with Vander Boegh at arms’ length and was entitled to rely upon his representation that the dwellings were well-constructed.
We hold that it was error to dispose of Tusch Enterprises’ misrepresentation claim against the Vander Boeghs at the summary judgment stage. Genuine issues of material fact exist whether the nondisclosure of the soil problems, coupled with the assurance that the duplexes were quality constructed, amounted to a misrepresentation. See Restatement (Second) of Torts § 551(2)(a), (b) and (e). Our holding here is not affected by the parol evidence rule. See n. 5, infra.
IV
Express Warranty
Tusch Enterprises alleges that the Vander Boeghs and Coffin breached an express warranty to the effect that the duplexes were well-constructed. Regarding Coffin, Tusch Enterprises readily admits that it did not know of Coffin until after it had purchased the duplexes and problems had become evident. There being nothing in the record to show that Coffin made any warranties to the Vander Boeghs or had any discussions with Tusch Enterprises, we affirm the dismissal of the express warranty claim against Coffin. With regard to the Vander Boeghs, the facts alleged in support of an express warranty are essentially those discussed in the preceding section under misrepresentation. Tusch Enterprises argues that these representations of quality construction became part of the bargain. However, we find that the parol evidence rule precludes Tusch Enterprises from making such an assertion and, accordingly, affirm the decision below dismissing the express warranty claim against the Vander Boeghs.
Before further addressing the applicability of the parol evidence rule, it is necessary to supplement the facts previously recited. When the third offer was accepted by the Vander Boeghs, they and Tusch Enterprises signed an earnest money agreement. This written document was prepared by Marianne Tusch, and included the following language with which she had become familiar through her employment with a real estate agency:
“The undersigned Buyer hereby acknowledges further that he has not received or relied upon any statements or representation by the undersigned broker or his representatives or by the Seller which are not herein expressed. The Buyer has entered into this agreement relying solely upon information and knowledge obtained from his own investigation or personal inspection of the premises. This agreement constitutes the whole agreement between the parties and no warranties, agreements or representations have been made or shall be binding upon either party unless herein set forth.”
A short time after executing the earnest money agreement, the parties entered into a written real estate contract, which was [44]*44prepared by the Vander Boeghs. This contract provided that it incorporated the terms and conditions of the earnest money agreement, except as modified by the real estate contract. The portions of the real estate contract pertinent to the present inquiry are as follows:
“12. EXCLUSIVE TERMS: This contract is the entire agreement between the parties and all other agreements heretofore entered into, either written or oral, are hereby either abrogated or contained in this agreement. All prior oral agreements and conditions are expressly waived unless stated in this agreement and the parties expressly understand they have no mutual understanding or agreement other than as herein set forth.
“13. WARRANTIES: The Purchasers have fully inspected the above described premises and know just exactly what they are purchasing. Sellers warrant that they have a good and sufficient title, and that the premises have no code violations or governmental restrictions as of May 15, 1979, and that further as of May 15, 1979, Sellers warrant that they know of no defects in the sewers, plumbing, electrical items, and mechanical items in and about the property. Other than as set forth in this paragraph, Sellers make no further warranties with regard to the condition of the sewer lines, utility poles, fences, curbs, sidewalks, streets, patios or any other mechanical item of any description whatsoever within the described premises.”
The features of the parol evidence rule are aptly stated in Chapman v. Haney Seed Co., Inc., 102 Idaho 26, 624 P.2d 408 (1981):
“It is the general rule that when a contract has been reduced to writing, which the parties intend to be a complete statement of their agreement, any other written or oral agreements or understandings (referred to in many cases as extrinsic evidence) made prior to or contemporaneously with the written ‘contract’ and which relate to the same subject matter are not admissible to vary, contradict or enlarge the terms of the written contract.” Id., at 28, 624 P.2d at 410.
A “merger” clause3 in a written agreement is one means of proving that the writing was intended as a complete statement of the parties’ agreement. Tapper Chevrolet Co. v. Hansen, 95 Idaho 436, 439, 510 P.2d 1091, 1094 (1973).
The merger clauses here are similar to the merger clause in Tapper Chevrolet.4 They unequivocally state that there are no terms, understandings or agreements other than those which are expressed by the parties’ written contract. Not insignificantly, Tusch Enterprises supplied the earnest money agreement and the merger clause contained therein. In addition, the real estate contract, unlike the earnest money agreement, was not a form agreement. Rather, it was a type-written document, tailored to the duplex sales transaction; and the record reflects that Tusch Enterprises objected to certain terms and was able to have them changed to its liking. Further, the merger clause of the real estate contract is not mere boiler plate: it, like the rest of the contract, was tailored to the duplex sales transaction.
From these facts, it is apparent that the parties intended the real estate contract, and the earnest money agreement by incorporation, to be a complete and exclusive statement of the terms of their agreement. The evidence proffered by Tusch Enterprises to the effect that the Vander Boeghs, prior to execution of these agreements, warranted that the duplexes were well-constructed is evidence that [45]*45would vary, contradict or enlarge the terms of the written contract. Thus, under the parol evidence rule, this evidence was properly excluded, and the express warranty count against the Vander Boeghs was properly dismissed.5
V
Implied Warranty
The final theory of recovery which we need address is implied warranty of habitability. Tusch Enterprises alleges a breach on the part of both Coffin and the Vander Boeghs. First, the Court will examine whether the integrated writings of the parties preclude the implied warranty of habitability. Next, we will address the issue whether the implied warranty of habitability extends to dwellings purchased for income-producing purposes which have never been occupied by the buyers. Then, we will determine if genuine issues of material fact exist as to whether the Vander Boeghs may have been builders or builder-developers and, thus, warrantors of habitability; and, if so, whether issues of material fact exist as to a breach of that warranty. Finally, we have to determine if genuine issues of material fact exist as to whether Coffin may have been a builder and, thus, a warrantor of habitability; and, if so, whether the implied warranty of habitability would extend to subsequent purchasers.
A. DISCLAIMERS
As noted in the preceding section, the integrated agreement of the parties purports to set forth all the warranties which attached to the duplexes. However, the warranty of habitability is not specifically mentioned or disclaimed in either the earnest money agreement or the real estate contract.
The majority of states permit a disclaimer of an implied warranty of habitability, but the disclaimer must be clear and unambiguous and such disclaimers are strictly construed against the builder-vendor. Belt v. Spencer, 41 Colo.App. 227, 585 P.2d 922, 925 (1978); Bridges v. Ferrell, 685 P.2d 409, 411 (Okla.Ct.App.1984); Crowder v. Vandendeale, 564 S.W.2d 879 (Mo.1978) (en banc). We agree with these courts and particularly with the Missouri Supreme Court:
“[O]ne seeking the benefit of such a disclaimer must not only show a conspicuous provision which fully discloses the [46]*46consequences of its inclusion but also that such was in fact the agreement reached. The heavy burden thus placed upon the builder is completely justified, for by his assertion of the disclaimer he is seeking to show that the buyer has relinquished protection afforded him by public policy. A knowing waiver of this protection will not be readily implied.” Crowder, supra, at 881 n. 4 (emphasis in original).
The Court explains its approach: “By this approach, boilerplate clauses, however worded, are rendered ineffective, thereby affording the consumer the desired protection without denying enforcement of what is in fact the intention of both parties.” Id., at 881. Accord Petersen v. Hubschman Construction Co., Inc., 76 Ill.2d 31, 27 Ill.Dec. 746, 751, 389 N.E.2d 1154, 1159 (1979).
The disclaimers in the instant case fall woefully short of fulfilling these requirements. Because the implied warranty of habitability is a creature of public policy, public policy dictates that it be waived only with difficulty. The party asserting that it has been waived bears the burden of proving that it has been knowingly waived. Clearly, when no mention is made of the implied warranty of habitability in a contract, and the contract contains only general language stating there are no warranties other than those contained within its four corners, any purported waiver of the implied warranty of habitability is ineffective.
Because we find that the implied warranty of habitability has not been disclaimed, we proceed to the next topic.
B. BUYERS
Next, we consider whether the implied warranty of habitability extends only to buyers who reside in dwellings after they are purchased. The uncontroverted facts show that Tusch Enterprises purchased the duplexes at issue for income-producing purposes and, rather than residing in them, has leased them to others. The Vander Boeghs and Coffin argue that these facts entitle them to judgment as a matter of law. We disagree.
Defendants cite an opinion of the Illinois Appellate Court, Hopkins v. Hartman, 101 Ill.App.3d 260, 56 Ill.Dec. 791, 427 N.E.2d 1337 (1981), as persuasive authority. The court there held that the implied warranty of habitability does not extend to duplexes purchased solely for income-producing purposes and never occupied by the owners. The court reasoned that the warranty runs only to “the relatively unsophisticated buyer, making a large investment, in a structure to be used by him as a residence.” Id., 56 Ill.Dec. at 793, 427 N.E.2d at 1339. Those who buy dwellings with the motive of producing income, it is advanced, do not fall within the class of persons protected by the implied warranty because the warranty “was intended to protect a consumer, not an investor.” Id.
We refuse to restrict the implied warranty of habitability to buyers who personally reside in dwellings after they are purchased. It is of no matter who ultimately inhabits the home after purchase, be it the buyer, a relative or lessee. The implied warranty is that the structure will be fit for habitation, and resolution of the question whether the buyer has received that which he bargained for does not depend upon the status of the buyer or ultimate user; it depends upon the quality of the dwelling delivered and the expectations of the parties. In transactions in goods, our Uniform Commercial Code implies warranties of merchantability and fitness for a particular purpose when certain circumstances are present. See I.C. §§ 28-2-314 and 28-2-315 (1980). Yet, the UCC does not distinguish, as Hopkins does with sales of homes, between buyers who seek income through the use of purchased goods and buyers who merely acquire them for personal use. The focus must be upon the product, be it a typewriter or a home, and not upon the buyer. We see no reason for following Hopkins’ consumer/investor distinction when the net effect would be to afford more protection to purchasers of chattels than purchasers of residential dwellings.
[47]*47Further, Hopkins ’ suggestion that investor-buyers can easily hire experts to evaluate dwellings prior to their purchase is impractical. The implied warranty of habitability only extends to latent defects manifesting themselves after purchase. It is unrealistic to expect buyers to consult geotechnical and other experts about defects that are not even apparent.6 In addition, as noted in our discussion below of the implied warranty count against the Vander Boeghs, we are mindful that it is the builder or builder-developer whose conduct has created the latent defect, and it is the builder or builder-developer who is in the better position to guard against and remedy such defects, or, at the least, disclose them.
Therefore, we hold that the implied warranty of habitability extends to residential dwellings purchased for income-producing purposes which have never been occupied by the buyers.
C. VANDER BOEGHS
The court below granted summary judgment in favor of the Vander Boeghs on Tusch Enterprises’ implied warranty of habitability count.
In Bethlahmy, supra, we recognized that when builder-vendors sell newly constructed buildings there is an implied warranty that the buildings will be habitable. Our rejection of the doctrine of caveat emptor as applied to the sale of new houses is consistent with the vast weight of authority. See, e.g., Redarowicz v. Ohlendorf 92 Ill.2d 171, 65 Ill.Dec. 411, 416, 441 N.E.2d 324, 329 (1982), and the cases cited therein. The trend away from the doctrine of caveat emptor in transactions of this nature is rooted in considerations of public policy:
“The mores of the day have changed and the ordinary home buyer is not in a position to discover hidden defects in a structure. A home buyer should be able to place reliance on the builder or developer who sells him a new home, the purchase of which in so many instances, is the largest single purchase a family makes in a lifetime. Courts will judicially protect the victims of shoddy workmanship. Consumer protection demands that those who buy homes are entitled to rely on the skill of the builder and that the house is constructed so as to be reasonably fit for its intended use. The average purchaser is without adequate knowledge or opportunity to make a meaningful inspection of the component parts of a residential structure.” Moxley v. Laramie Builders, Inc., 600 P.2d 733, 735 (Wyo. 1979) (footnote omitted).
Economic policy considerations come into play as well:
“[B]y virtue of superior knowledge, skill, and experience in the construction of houses, a builder-vendor is generally better positioned than the purchaser to know whether a house is suitable for habitation. He also is better positioned to evaluate and guard against the financial risk posed by a [latent defect], and to absorb and spread across the market of home purchasers the loss therefrom. In terms of risk distribution analysis, he is the preferred or ‘least cost’ risk bearer. Finally, he is in a superior position to develop or utilize technology to prevent such defects: and as one commentator has noted, ‘the major pockets of strict liability in the law’ derived from ‘cases where the potential victims ... are not in a good position to make adjustments that might in the long run reduce or eliminate [48]*48the risk.’ R. Posner, Economic Analysis of Law 140-41 (2d ed. 1977).” Gaito v. Auman, 70 N.C.App. 21, 318 S.E.2d 555, 559 (1984), aff'd, 313 N.C. 243, 327 S.E.2d 870 (1985).
Further, the implied warranty of habitability is not limited to builder-developers:
“We can see no difference between a builder or contractor who undertakes construction of a home and a builder-developer. To the buyer of a home the same considerations are present, no matter whether a builder constructs a residence on the land of the owner or whether the builder constructs a habitation on land he is developing and selling the residential structures as part of a package including the land. It is the structure and all its intricate components and related facilities that are the subject matter of the implied warranty. Those who hold themselves out as builders must be just as accountable for the workmanship that goes into a home ... as are builder-developers.” Moxley, supra, at 735.
However, the implied warranty of habitability only applies to those who are in the business of building dwellings. Hibbler v. Fisher, 109 Idaho 1007, 712 P.2d 708 (Ct.App.1985); Klos v. Gockel, 87 Wash.2d 567, 554 P.2d 1349, 1352 (1976) (en banc); Moxley, supra.
By adopting the implied warranty of habitability, we did not intend to make builders or developers the insurers against any and all defects in a home:
“The implied warranty of fitness [for habitability] does not impose upon the builder an obligation to deliver a perfect house. No house is built without defects, and defects susceptible of remedy ordinarily would not warrant rescission. But major defects which render the house unfit for habitation, and which are not readily remediable, entitle the buyer to [relief]. The builder-vendor’s legitimate interests are protected by the rule which easts the burden upon the purchaser to establish the facts which give rise to the implied warranty of fitness [for habitability], and its breach.” Bethlahmy, supra, 91 Idaho at 68, 415 P.2d at 711.7
Although it is clear from the facts of the instant case that Coffin constructed the duplexes, there appears to be some dispute as to the precise relationship between Coffin and the Vander Boeghs. If the Vander Boeghs did no more than contract with Coffin to have the duplexes built, then the implied warranty would only extend from Coffin. If, on the other hand, the Vander Boeghs had expertise in the construction business and exercised control over the construction of the duplexes, as would a builder-developer, then the implied warranty would extend from the Vander Boeghs and not Coffin.
Construing the facts in favor of Tusch Enterprises, we note that Robert Vander Boegh had many years of experience in the road construction business. Regarding the duplexes, he contracted with Coffin to have the structures built. He contracted with others to level the land and make other site preparations. He periodically visited the site during the construction phase and consulted with Coffin about the possibility of fill dirt existing under the south duplex. Coffin stated that he relied upon Vander Boegh’s expertise in these matters. From [49]*49these facts it cannot be concluded that there is no genuine issue as to whether Vander Boegh was a developer-builder or merely an ordinary person with little expertise who contracted with others to have a house built for him. Although it appears Coffin may have been ultimately responsible for constructing duplexes that were habitable, it is not for us to weigh the facts. That function rests with the trier of fact. Whether the implied warranty of habitability extends from the Vander Boeghs or Coffin, Tusch Enterprises has alleged major defects in the construction of the south duplex which would fall within the warranty.
Having found that genuine issues of material fact exist, we hold that it was error for the court below to dismiss Tusch Enterprises’ implied warranty of habitability claim against Vander Boeghs.
D. COFFIN
Construing the facts again in favor of Tusch Enterprises, we conclude that they are sufficient to raise an issue as to whether Coffin was a builder in the sense that an implied warranty of habitability would flow from him. The Court, however, must consider a remaining issue: whether a subsequent purchaser of residential dwellings may assert a claim for breach of the implied warranty of habitability against the builder of the dwellings when there is no privity of contract between them.
The growing trend among other jurisdictions is to extend the implied warranty of habitability to subsequent purchasers. The following courts have so extended the doctrine: Barnes v. Mac Brown & Co., Inc., 264 Ind. 227, 342 N.E.2d 619 (1976) (cracks in basement walls); Moxley, supra, (Wyo.1979) (defective electrical wiring); Terlinde v. Neely, 275 S.C. 395, 271 S.E.2d 768 (1980) (foundation settled causing walls to crack, floors to sink, doors to not close properly, etc.); Hermes v. Staiano, 181 N.J.Super. 424, 437 A.2d 925 (N.J.Super.Ct.Law Div.1981) (defects in foundations wall and underground sewage disposal system); Blagg v. Fred Hunt Co., Inc., 272 Ark. 185, 612 S.W.2d 321 (1981) (strong odor and fumes from formaldehyde); Elden v. Simmons, 631 P.2d 739 (Okla.1981) (defective bricks); Redarowicz, supra, (1982) (defects in chimney and wall); Keyes v. Guy Bailey Homes, Inc., 439 So.2d 670 (Miss.1983) (foundation cracked); Gupta v. Ritter Homes, Inc., 646 S.W.2d 168 (Tex. 1983) (foundation settled excessively causing walls to crack, roof to leak, and patio to pull away from house); and Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984) (en banc) (faulty pipes, separation of floors from walls, cracking of walls, doors that would not close, etc.).
In choosing to follow this trend, the Arizona Supreme Court explained that limiting the implied warranty to first buyers would not only be arbitrary, but might encourage sham first sales calculated to insulate builders from liability. They explained further:
“The same policy considerations that lead to [our adoption of the implied warranty of habitability for sales of new homes]— that house-building is frequently undertaken on a large scale, that builders hold themselves out as skilled in the profession, that modem construction is complex and regulated by many governmental codes, and that homebuyers are generally not skilled or knowledgeable in construction, plumbing, or electrical requirements and practices — are equally applicable to subsequent homebuyers. Also, we note that the character of our society is such that people and families are increasingly mobile. Home builders should anticipate that the houses they construct will eventually, and perhaps frequently, change ownership. The effect of latent defects will be just as catastrophic on a subsequent owner as on an original buyer and the builder will be just as unable to justify improper or substandard work. Because the builder-vendor is in a better position than a subsequent owner to prevent occurrence of major problems, the cost of poor workmanship should be his to bear.” Richards, supra, 678 at 430.
We adopt the reasoning of these courts, but with the following proviso:
[50]*50“This extension of liability is limited to latent defects, not discoverable by a subsequent purchaser’s reasonable inspection, manifesting themselves after the purchase. The standard to be applied in determining whether or not there has been a breach of warranty is one of reasonableness in light of surrounding circumstances. The age of the home, its maintenance, the use to which it has been put, are but a few factors entering into this factual determination at trial.” Barnes, supra, 342 N.E.2d at 621.
This extension to subsequent purchasers is also limited to latent defects which manifest themselves within a reasonable time. Redarowicz, supra, 65 Ill.Dec. at 411, 441 N.E.2d at 331; Moxley, supra. Further:
“The burden is on the subsequent owner to show that the defect had its origin and cause in the builder-vendor____Defenses are, of course, available. The builder-vendor can demonstrate [that the suit was not brought within the appropriate statute of limitations,] that the defects are not attributable to him, that they are the result of age or ordinary wear and tear, or that previous owners have made substantial changes.” Richards, supra, 678 P.2d at 430.
We recognize that in Salmon Rivers Sportsman Camps, Inc. v. Cessna Aircraft Co., 97 Idaho 348, 544 P.2d 306 (1975), a case dealing with a sale of goods, we held privity of contract is a prerequisite to recovery of pure economic losses in an action for breach of implied warranty. Nonetheless, in State v. Mitchell Construction Co., 108 Idaho 335, 699 P.2d 1349 (1984), three members of this Court expressed the view that this privity requirement should be abolished. Salmon Rivers was decided prior to our decision in Clark, supra. As noted earlier, Clark held that a party suffering only economic losses could not recover under a negligence theory. The rationale behind that decision was to allow the law of contracts to resolve disputes concerning economic losses. If, however, in the area of pure economic losses, negligence is to be preempted by contract principles, as we ruled in Clark, then contract principles must be given a freer hand to deal with injuries the law has typically redressed. Therefore, we decline to extend the privity requirement enunciated in Salmon Rivers to the facts at hand.8 The instant case is not a goods case, and the question regarding the continued vitality of Salmon Rivers in such cases is better left to another day when a response on our part would be something more than mere dictum.
We hold only that subsequent purchasers of residential dwellings, who suffer purely economic losses from latent defects manifesting themselves within a reasonable [51]*51time, may maintain an action against the builder (or builder-developer, as the case may be,) of the dwelling based upon the implied warranty of habitability despite the fact that no privity of contract exists between the two. Any other holding would lead to an absurd result. For example, suppose an unscrupulous builder constructed a home of inferior quality and sold it to another. Suppose further, that for whatever reason, the buyer after three months sold the home to a second purchaser. And one month later the foundation of the house split apart rendering the home valueless. Should the common law deny the subsequent purchaser a remedy against the builder merely because there is no privity of contract and because the damages happen to be purely economic, when it was the conduct of the builder which created the latent defect in the first place?
We conclude that it was error for the court below to enter summary judgment in favor of Coffin on Tusch Enterprises’ implied warranty of habitability count.
The decision of the court below is affirmed as to the negligence and express warranty counts. The decision granting summary judgment against Tusch Enterprises on the misrepresentation and implied warranty counts is reversed, and remanded for further proceedings not inconsistent with this opinion.
Costs to appellants.
No attorney fees on appeal.
BISTLINE and HUNTLEY, JJ., concur.