Latent Defects: extending the statute of limitations (law note)

 

surprisedAs we’ve previously discussed, the statute of limitations for construction claims in North Carolina is generally three years.  That is, once 3 years have passed, you are generally protected from any lawsuit filed after that time.

Does that mean that no lawsuit can be filed against you subsequent to that time?  No.  First, the statute of limitations is an affirmative defense, meaning that you must timely assert the defense as part of your response to the lawsuit.

Secondly, it is sometimes not apparent when the three year period begins to run.  Substantial completion or final completion?  What if your work is finished, but the project is not– does the three year period not start until project completion?  The issue of whether the statute of limitations has run is complex, and a mixture of law and fact questions.  See, Lord et al v. Customized Consulting Specialty, Inc. et al, 182 N.C. App. 635, 643 S.E.2d 28 (2007).

Finally, be aware of the hidden danger of hidden dangers. 

The three years does not start to run until it becomes obvious that there is damage stemming from your professional negligence.  The applicable statute states that the three years “shall not accrue until bodily harm to the claimant or physical damage to his property becomes apparent or ought reasonably to have become apparent to the claimant, whichever event first occurs.” N.C. Gen.Stat. § 1-52 (2005).

In other words, if there is a defect that is not readily observable and visual, the three years may not start to run until it becomes observable (e.g., through destructive testing, repair work, or renovation work).  This is what is known as a “latent defect”, and it can impose liability far beyond the initial 3 years.

Does the latent defect rule extend liability indefinitely?  No, it does not.  The statute of repose (6 years in NC; other states vary) will impose an absolute final date on real property improvements, after which no further liability can successfully be claimed.

Questions?  Drop me a comment, below.  Also, be sure to sign up for regular email updates and our free Construction Professional newsletter by entering your contact information on the top right of the homepage.

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Add a comment »8 comments to this article

  1. What if an almost entire neighborhood built never got their 1 yr walkthru items,after build, fixed. Most owners gave up trying. The builder kept saying every company he used went out of business and he wd find a new one. The PM of the neighborhood Kept ignoring dates set to fix items over and over, promising to fix, have emails he wd come, never show……then
    one home owner who still wants items fixed, got deathly ill for last 2.5 yrs and no physical or mental ability to follow back up with PM to fix items, told them they were not off the hook though, and when he could f/up after 7 yrs after build, can they sue for anything walkthru, structural issues be done?

    Reply

    • If it has been 7 years, regardless of circumstances, than you are out of luck. This isn’t the statute of limitations issue, it is the statute of repose that is coming into play. NC has a 6 year statute of repose on construction. Sorry!

      Reply

  2. Melissa,

    Our house was completed in North Carolina and my wife and I accepted that construction (including the deck) in October 2007.

    When getting ready to re-stain our deck in August 2014, I found unstable deck boards at the conjunction of the deck and the sun room. After removing several of the boards in the conjunction area I found that no flashing had been installed (violation of code) between the boards and subfloor and that wet rot had eaten into the sun room subfloor, a door and frame from the sun room to the deck that we do not use, and possibly some wall framing studs (new contractor has not yet examined this possibility as it requires removing interior wall board and exterior stucco).

    My question is whether or not the original contractor is still liable for the problems found under the theory of “latent defects.” Any advice you can provide in this matter would be greatly appreciated.

    Ron Thompson

    Reply

    • Ron:
      You’d have a case for a latent defect IF you had discovered this within 6 years. Since it was not within that statute of repose, you are unfortunately out of luck as to the contractor. The statute of limitations can be extended by latent defects, but not the 6 year statute of repose. You might see if your homeowners’ insurance covers the claim.

      Reply

  3. Hi, Melissa:

    I am running on time after I habe been reading your answers to questions on SOL. Please, I would like to have a consultant meeting with you as soon as possible. My cel phone number is 919-xxx-xxxx.

    Sincerely,

    Gerardo Montero

    Reply

    • Gerardo:

      Please call my office on Monday at 919.881.2214 and we can talk. Thanks.

      Reply

  4. I have a simple question about latent defects: does the seller’s liability terminate on his death, or can the buyer pursue his remedies against the seller’s heirs?

    Reply

    • Paul:
      I don’t believe that a construction defect is a claim that is personal to the individual, in which case you could look to the estate for assets if the estate is not yet closed. You would want to consult an estate attorney for confirmation.

      Reply

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