Statute of Repose: Putting your Risk to Bed

Ferret's new hammock

Last week, I discussed the statute of limitations  and how it is generally applied to North Carolina construction projects.  Today, I want to introduce you to another important concept: the statute of repose.

What is the Statute of Repose?

The Statute of Repose is another time-barring statute within which your claim must fit. Like the statute of limitations, it depends on what state’s law will apply to your case, which is usually, but not always, the state where the project is located.

The Statute of Repose, under N.C. Gen. Stat. §1-50(a)(5)(a) provides:

“No action to recover damages based upon or arising out of the defective or unsafe conditions of an improvement to real property shall be brought more than six years from the later of the specific last act or omission of the defendant giving rise to the cause of action or substantial completion of the improvement.”

When does it run for North Carolina construction projects?

The Statute of Repose in North Carolina for improvements to real property is currently six (6) years from substantial completion or the last specific act or omission of  the defendant, whichever is later. N.C. Gen. Stat. §1-50(a)(5)(a); Nolan v. Paramount Homes, Inc., 135 N.C. App 73, 518 S.E.2d 789 (1999).  Once you have been off of a job for 6 years, you cannot (successfully) be sued for any construction defect, regardless of when the defect was or is discovered.  It is an extreme, bright line bar to any claim after that time; that is, it puts your risk to bed.

How is it different from the Statute of Limitations?

Unlike the Statute of Limitations, the Statute of Repose starts running whether or not you are aware of any defect.  Bryant v. Don Galloway Homes, Inc.,, 147 N.C. App. 655, 556 S.E.2d 597 (2001). This is a double-edged sword—if you are the one whose work is being questioned, you can rest easy that after you have been off of a project for 6 years, no claim can thereafter be (successfully) brought against you.

On the other hand, you are also bound by the repose statute, regardless of any equitable considerations. For example, in Monson v. Paramount Homes, Inc., homeowners sued a general contractor for defective construction, and the contractor brought a third-party action against his subcontractor. The claims against the subcontractor were deemed time-barred under the statute of repose.  133 N.C. App. 235,515 S.E.2d 445 (1999). In Monson, the contractor had to defend the action but had no ability to recover from the subcontractor who actually performed the poor construction.

Does punch list or warranty work extend the Statute of Repose?

In most cases, no.  Once the statute of repose starts to run, it generally cannot be tolled by any subsequent action.  For example, in one case, even when the contractor had performed some punch list work after substantial completion, and even though the architect failed to issue a certificate of substantial completion, the court held that the statute began to run at the date of substantial completion of the contractor’s work.  Mitchell v. Mitchell’s Formal Wear, Inc, 168 N.C. App, 212, 606 S.E.2d 704 (2005).

This is also true if you return to the job for minor warranty type issues during the 6 year period. The statute of limitations is tolled during the repair time, but in general, the statute of repose is not tolled once it begins running. The policy behind this interpretation is that the Statute of Repose is a substantive right designed to limit the potential liability for a set period of time.

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Photo “Cama nova do furas / Ferret’s new hammock” by Isa Costa via Flickr via Attribution-NoDerivs 2.0 Generic Creative Commons license.

 

Add a comment »19 comments to this article

  1. Tools in your Toolbox | Construction Law in North Carolina
  2. Does the Statute of repose apply if the work was not done according to code. For example, we are having roof issue’s with a house we bought (brand new) in 2007. There was a leak in 2009 which the builder had his subcontractor come out and supposedly fix. Now we find the leak was never properly repaired and subsequently we have major mold/mildew damage. When speaking with the our Town’s building inspectors they admit they do a visual inspection of the roof but don’t actually get on the roof. We were told by the building inspections department we may have a case if the roof wasn’t built according to N.C. Code. In the event it doesn’t apply what other recourse do we have regarding the builder?

    Reply

    • The statute of repose applies to all cases. There are very, very limited exceptions where, for example, the parties agree to toll the statute by written agreement. While a statute of limitations can be extended due to latent or hidden defects, the statute of repose can and does sometimes run before you even know you have a problem. It’s not always an ideal result, such as in your case, but the law needs finality. Your best bet at this point is likely a homeowners insurance claim, and reporting the builder to the licensing board.

      Reply

  3. Hi Melissa!
    I had a small contractor (2 people) build a deck on the back of my house which includes a screened-in porch finishing the job June 20, 2009. From what I can tell, the roof pitch is not enough to allow water to run off & it has leaked since day one. He used OSB & it now appears to be rotting making it unsafe for me or anyone to climb on the roof to rake off pine straw. I contacted the contract a week or so after completion. He said he would be over to fix the problem, but we haven’t see him yet. From time to time my wife & I try calling him with no luck. My brother works at Lowe’s & he used to confront him about it each time saying he would call me. Haven’t heard a word! it’s time for us to pursue a new roof on all of our house, but I know the roofer will run across this problem & I’ll have to pay for this guy’s errors again to make it right. Can I report him the State Building office? I really believe paying for the repairs will cost less than attorney fees, but this guy needs to be off the streets. He’s done this with another friend of mine also who had to pay a roofer to fix his errors. Thanks so much!
    Robert

    Reply

    • Robert:
      Yes, you can make reports to the Licensing Board for General Contractors, assuming that he has a g.c. license. You can also always report folks to the Attorney General’s office which, if enough people complain about a business, will do an investigation. You might check as well to see if the contractor has insurance that might cover these defects, since it caused problems to other property of yours and not just the deck.

      Reply

  4. I have paid my previous attorney over 100,000.00 in attorney fees. My construction suit was filed 2008 and voluntarily dismissed without prejudice 2010 without my knowledge. Suit was filed again 2011 and dismissed by stipulation of dismissal in 2012 also without my knowledge. The last work preformed by the contractor was in July of 2006. My attorney told me my claim for fraud was not time barred although the statute of limitation on the other claims are. Any suggestions on what I should do now.

    Reply

    • Dear Lost:

      Of course I cannot comment on the specifics of your case, but if you believe that actions were taken without your consent you should file a complaint with the Grievance Committee of the NC State Bar. You may also want to consider bringing a civil action against your lawyer, but those are tough cases to make absent extremely good documentation.

      Reply

  5. You mention that warranty work does not extend the statute of repose in most cases. What if the warranty work is specifically the latent defect under dispute? In my case, new construction completed over 6 years ago, the statute of repose has expired for that original “improvement to real property”. Water infiltration caused window leaks that were repaired under warranty 3 years ago. After heavy rains last week, the same windows leaked again, and upon inspection of the problem, structural framing members have been weakened by prolonged water infiltration due to improper warranty work, which will require costly repairs. Is there a separate statute of repose on the warranty work as a “last act” of that “improvement to real property”? Or am I barred by the original statute of repose to bring claims against the latent defects in the warranty work? Thank you very much for your concise descriptions of NC SOL/SOR.

    Reply

    • Mo: Thanks for your comment. Since there were defects in the warranty work itself, I believe you’d have a valid argument for a claim on that warranty work for 3/6 years from that date. 3 years on the SOL, and 6 on the SOR. Hope that helps.

      Reply

  6. Thanks,
    Another question; could the Archtect be held liable for Profesional Negligence past the 6 year period for knowingly specifying a non-compliant product. Then knowingly trying to remedy the mistake by adding suplemental materials to try to make the product compliant.

    Reply

    • Jack:

      Sorry I missed this comment earlier. In general, past 6 years = no liability. However, there are exceptions– for example, if you fraudulently conceal the situation such that the discovery is not reasonably made until later, the court may find that the statue of repose was tolled, or make another equitable finding, such that the architect could still have liability.

      Reply

  7. What is a Statute of Repose | Construction Law Today
  8. I am dealing with a situation where the Architect specified a specific LVL preengineered beam for supporting outside balconies. when in fact the Manufacturer of those beams specifically specifies for dry undercover use only. The Beams are now failing. The beams were installed 2 between 2001-2030. Does the Statute of Repose also cover the architect for his negligence. We just discovered the rot here in 2012.

    Reply

    • Jack:
      Thanks for your comment. Yes, architects also have statutes of repose and limitations which apply to their work. There can be some question as to when the statute begins to start running for an architect, esp if they were involved in the construction administration. If the architect only did design and was not involved in construction, then the statute presumably starts running against the architect that much sooner.

      Reply

  9. Construction Lawsuit Facts & Figures (infographic)
  10. I don’t understand this:

    “The claims against the subcontractor were deemed time-barred under the statute of repose. 133 N.C. App. 235,515 S.E.2d 445 (1999). In Monson, the contractor had to defend the action but had no ability to recover from the subcontractor who actually performed the poor construction.”

    Why does the contractor have to defend the action; when the subcontractor is protected by the Statute of Repose. Shouldn’t it apply to both of them?

    Reply

    • Grant:
      Thanks for your comment. The statute of repose runs from the date of your last work. If the subcontractor last worked on the project on January 1st, 1980, his statute of repose would run January 1st 1986. The GC was probably on the job longer. Let’s say he finished on March 1st, 1980. His statute of repose then would run on March 1st 1986. If a lawsuit against the GC were commenced in February 1986 (and it qualified under the statue of limitations as a latent discovery), the GC could be on the hook while the sub is not. True, it is unfair to the GC, esp if it is the sub’s work that is really at issue. However, the point of the statue of repose is to give some finality that after X date, nobody can come after you no matter what.

      Reply

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