Numerous clients come to me with potential construction defect litigation and, during our initial meeting, explain that they were told they have 10 years from the time that work was completed on their home to file a claim under the appropriate statute of limitations. This makes me cringe…and my clients cringe too, because many of them have waited – often years – before seeking a construction defect lawyer believing they have plenty of time (which unfortunately, they do not). The confusion is between Oregon’s “statute of ultimate repose,” and the “statute of limitations” applicable to their claim(s). What most non-legal professionals fail to realize is that Oregon’s 10-year statute of ultimate repose is only half of the equation in determining whether a lawsuit is initiated in a timely manner; the relevant statute of limitations must be considered (and is often more important). It goes without saying that it is important you don’t lose your claim.
First, there is the statute of ultimate repose, which, in the context of construction defect law, dictates that a person may not initiate a lawsuit more than 10 years after substantial completion (or abandonment) of construction. Normally, a factual inquiry must be made to determine when the home (or construction work) was substantially completed or abandoned.
Next, there is the relevant statute of limitations: the period of time within which one may bring a particular type of claim. The statute of limitations is dependent on the type of claim brought. Generally, construction defect litigation is based on one of two theories: negligence or contract (though construction defect litigation can also be based in the theories of breach of implied warranty of habitability, breach of express warranty, unlawful trade practices, and fraud, among others). Negligence has a 2-year statute of limitations, which runs from the date of discovery of the negligence. In other words, the 2-year clock for a negligence claim begins running at the time when you first learn your home-builder did not wrap your windows properly and that is why it rains in your home during the winter months. The statute of limitations for a contract claim, however, is 6 years starting from the date of the breach. In other words, in most construction defect cases, the 6-year clock for a contract claim begins running on the date the work was completed. (This is, of course, a generalization, as there are many factors that determine the triggering date of a claim and whether it can be extended through proper notices.)
The nuances between the statute of ultimate repose and the statute of limitations may be difficult at first glance, which is likely the basis for the confusion. Let me illustrate using the most frequently based claims of construction defect litigation: negligence and contract. The law requires that you initiate your construction defect lawsuit within both the 10-year statute of ultimate repose, and the applicable statute of limitations. Therefore, if the work on your home was completed in 2002 and a 2004 inspection uncovers construction defects, your negligence claim (2-year statute of limitations from discovery) may be barred if you wait until 2007 to initiate a suit, despite having another 5 years left under the 10 year statute of ultimate repose. However, when you discover a defect in your home nine years and eleven months after the work was performed, although the clock just started on the 2-year statute of limitations for negligence claims, you have only one month under the statute of ultimate repose to initiate an action. The same goes for a contract claim, if you discover the defect a more than 6 years after your home was completed, you may be barred by the statute of limitations for a contract claim, despite having 3 years left within the statute of ultimate repose.
The long and short of it is you must initiate your construction defect lawsuit within both the 10-year statute of ultimate repose, and the applicable statute of limitations. Don’t delay…always consult an construction defect lawyer if you think you may have a claim.